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Bank of Thailand to continue gradual approach to policy
normalisation, closely monitoring inflation
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Economic recovery helped by tourist arrivals
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Consumption, demand could add to inflationary pressure
(Recasts with comments from central bank analyst meeting)
By Kitiphong Thaichareon and Chayut Setboonsarng
BANGKOK, April 12 (Reuters) - Thailand's economy has
returned to pre-pandemic levels and is gradually recovering,
helped by tourism, the country's central bank said on Wednesday,
adding it was closely monitoring inflationary pressures.
"Arrivals (this year) could exceed targets," Bank of
Thailand (BOT) senior director Sakkapop Panyanukul told an
analyst meeting on Wednesday, maintaining a target of 28 million
arrivals for 2023.
The bank would closely monitor inflation and the recovery in
demand that could add to pressures.
The BOT continued to back a approach of gradual and measured
policy normalisation as it hiked rates last month, minutes of
the meeting showed, citing a risks inflation could stay elevated
longer than expected.
On March 29, the BOT's policy committee voted unanimously to
raise the one-day repurchase rate by a quarter
point to 1.75% to try to curb inflationary pressures.
Policy tightening would continue as core inflation would
remain high, the minutes released on Wednesday showed.
The BOT has hiked the benchmark interest rate by a total of 125 basis points since August, less aggressive than many of its peers in Southeast Asia as Thailand's economic recovery has lagged the region. At the last meeting, the BOT also trimmed its economic growth projections to 3.6% this year and 3.8% next year, from the previous forecasts of 3.7% and 3.9%, respectively, with a strong rebound in tourism the main driver. Southeast Asia's second-largest economy expanded 2.6% last year at a time when its tourism sector had just started to recover.
"There remained a risk of inflation staying elevated for longer than expected, as firms could pass on higher costs absorbed in the past and demand-side pressures could pick up," the minutes said.
Headline inflation dropped to its lowest rate in 15 months of 2.83% in March, returning within the BOT's target range of 1% to 3% for the first time since 2021. The core inflation also slowed in March. The BOT forecast headline inflation at 2.9% this year, with the core rate seen at 2.4%. Headline inflation is expected to return to the target range in the second quarter. (Reporting by Chayut Setboonsarng, Satawasin Staporncharnchai and Kitiphong Thaichareon Editing by Ed Davies and Raju Gopalakrishnan)
