Bangkok, Aug. 2-The MPC unanimously resolved to raise the policy interest rate by 0.25% per year from 2.00% to 2.25% per year due to the slowdown in many foreign economies, but still needs to be monitored. while the Thai economy has not yet recovered The slowdown in exports and political instability.

Mr. Piti Disyatat, Assistant Governor Monetary Policy Group The Bank of Thailand or BOT announced the results of the Monetary Policy Meeting No. 4/2023 that the Committee unanimously resolved to raise the policy rate by 0.25 percent per year from 2.00 percent to 2.25 percent per year. As a result, the Thai economy as a whole tends to continue to recover. The latest foreign demand slowed down somewhat. but is expected to gradually improve in the next phase Inflation has declined and is likely to remain stable within the target range, with high risks.

The Committee assessed that in the context of the economy recovering to its potential level Monetary policy should maintain inflation within the target range sustainably. and helps to enhance long-term economic and financial stability by preventing the accumulation of monetary imbalances caused by prolonged low interest rates. and maintaining the ability of monetary policy to withstand high levels of uncertainty going forward. Therefore, the policy rate should be raised by 0.25 percent per year at this meeting.

However, the Thai economy tends to expand mainly from tourism and private consumption, while merchandise exports contract in the short term. This was partly due to the slow recovery of the Chinese economy and the global electronic cycle. But it is expected to rise in the future in line with the global economic recovery trend. both from the export sector that may recover more slowly than expected Including the political situation that is still highly uncertain.

Headline inflation declined from energy prices. cost-of-living assistance measures and the effect of a high base in previous years. But it is expected to rise in the second half of the year after temporary factors gradually subside.

Meanwhile, core inflation has declined but tends to stay at a higher level than in the past. There is a high risk from rising food costs if the El Niño phenomenon is more severe than expected. This may accelerate the pass-through of costs for operators in the context of continued economic growth.

In addition, the overall financial system is stable. Commercial banks have strong capital and reserve levels. However, credit quality may deteriorate as debt serviceability of some SMEs and households remains fragile due to higher debt burden and slow income recovery. The Committee supported the ongoing implementation of debt restructuring measures. as well as specific measures and sustainable solutions to debt problems for vulnerable groups. In particular, measures on responsible and fair lending (Responsible Lending) overall financial conditions eased, but still conducive to private sector fundraising and economic recovery. The private sector's borrowing costs tend to increase in line with the policy interest rate. Meanwhile, the slowdown in private credit was partly due to their adjustment to normal levels after continuing to expand during the COVID-19 crisis. Regarding the baht exchange rate against the US dollar fluctuating movement According to the direction of monetary policy of the US Federal Reserve Chinese economic outlook and political instability in Thailand under the framework of monetary policy aimed at maintaining price stability. along with taking care of the economy to grow sustainably and reach its full potential and maintain financial stability

The Committee assessed that the Thai economy was likely to continue to expand towards its potential level. While inflation moves towards the target range, but high-level risks must be monitored. Monetary policy should also ensure that inflation is within the sustainable target range, along with giving importance to long-term economic and financial stability. Further policy rate hikes will be considered in line with the trends and risks of the economy and inflation, etc.-Thai News Agency

Source: Thai News Agency