The Monetary Policy Committee (MPC) voted 4 to 3 to maintain the policy rate at 0.50 percent. Three members voted in favor of raising the policy rate by 0.25 percentage points.
The Bank of Thailand has kept its core policy rate unchanged at 0.5%, amid mounting price pressures and tightening monetary policy by its peers.
The committee assessed that the Thai economy would continue to recover and could expand faster than previously expected due to strong domestic demand and the pickup of foreign tourists.
Headline inflation is estimated at 6.2 percent
Headline inflation is projected at 6.2 percent in 2022 and 2.5 percent in 2023. Inflation will surpass the target in 2022 due to rising domestic energy prices and a wide range of higher cost passthroughs across a wide range of products.
The split of votes by the Monetary Policy Committee (4 to 3) points to the recent resurgence of inflation, which reached a 14-year high of 7.1% in May.
For this year, the Monetary Policy Committee estimates that the country’s inflation will reach 6.2%, higher than the previous forecast of 4.9%.
However, the committee further assessed that the Thai economy would expand to 3.3 percent in 2022 and 4.2 percent in 2023 on the back of a better-than-expected recovery in domestic use, especially in the services sector. Arrivals of foreign tourists have also improved following the rapid relaxation of border controls in Thailand and other countries.
Foreign arrivals are projected to reach 6 million this year, which is expected to rise to 19 million next year.
The overall financial system remains resilient. Commercial banks have provisions for high level capital adequacy and credit losses. Liquidity remains sufficient in the financial system, although the distribution of liquidity still varies across the economic sector. Some families and businesses remain at risk for rising living and production costs because their incomes have not been fully recovered without their high levels of debt.
The Bank of Thailand will put a brake on interest rates, even as other central banks begin to tighten monetary policy, as long as inflation in Thailand remains within a small set, its governor told Nikkei Asia in an exclusive interview.