By Orathai Sriring and Kitiphong Thaichareon
BANGKOK- There is room for a rate cut in Thailand as inflation is low though it is ultimately the central bank’s decision, the finance minister said on Tuesday as he reiterated his call for monetary and fiscal policy to work together to support the economy.
Finance Minister Pichai Chunhavajira also told a business forum that he wanted the baht to stabilise at a weaker level to support the economy, which he said could grow 4 percent to 5 percent next year if policy was properly coordinated.
He expected growth this year would be between 2.6 percent and 2.8 percent.
Thailand’s economy grew an annual 3 percent in the July-September quarter, the fastest pace in two years and beating expectations, but officials and analysts see increased challenges to maintaining the momentum next year.
Speaking to reporters after his speech, Pichai said he wanted a rate cut to follow the one in October, but said the decision would depend on the Bank of Thailand’s (BOT) monetary policy committee.
“I would like to see interest rates reduced further, but whether it will be at the next meeting, I don’t know,” he said.
In October, the BOT unexpectedly cut the key interest rate by a quarter point to 2.25 percent. The next policy review is on Dec. 18.
For the January-October period, average annual headline inflation was only 0.26 percent, well below the central bank’s target range of 1 percent to 3 percent.
The International Monetary Fund said last week a further rate reduction would support Thailand’s economic recovery.
At a separate event, Governor SethaputSuthiwartnarueput said a mix of policies was needed to manage the economy as interest rates alone cannot address everything.
“Interest rates alone can’t solve all the problems. Implementing a resilient policy must be supplemented with other measures,” he said. “We want to implement a robust policy”. – Reuters
