BANGKOK- Thailand’s current benchmark interest rate of 2.5 percent is “quite robust to many scenarios”, an assistant central bank governor said on Monday, shrugging off government pressure that monetary policy is too tight.
Piti Disyatat also said in an interview with Suthichai Live channel that the central bank did not want a high inflation rate, but a rate that is anchored.
The government has been at loggerheads with the central bank for months over interest rates, with Prime Minister SretthaThavisin calling for a rate cut to revive Southeast Asia’s second-largest economy.
Earlier this month, the Bank of Thailand’s (BOT) committee held its key interest rate steady at 2.50 percent , the highest in more than a decade. The next rate review is on Aug 21.
“The committee is trying to set a neutral rate at this point,” said Piti, who described the current rate as “quite robust to many scenarios”.
Monetary policy can’t be the engine of growth, he added.
The BOT forecast economic growth of 2.6 percent this year, but Piti said it could reach 3 percent if a government handout scheme is implemented. Last year’s growth was 1.9 percent .
The central bank has previously said it was not worried about inflation and its target range was still in line with economic fundamentals.
Headline consumer inflation in May returned to the BOT’s target range of 1 percent to 3 percent for the first time in a year.
“We don’t want prices to go higher. Because we know that it especially hits the poor people more than the middle income people,” said Piti, adding that the central bank was trying to ensure inflation is “well anchored”.
“What we aim for is the underlying momentum of inflation over the medium term. So our target of 1 percent to 3 percent is definitely a medium-term target and this is the same as other central banks in the world,” he said.
