Thai Finance Minister Supports Small Rate Increase to Protect Growth

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Last Updated on August 9, 2022 by Bitfinsider

According to the nation’s finance minister, Thailand’s central bank should avoid a sharp path of policy tightening to protect the economy’s fledgling recovery and control the fastest inflation in more than a decade.

To control inflation, which is now hovering at a 14-year high, the BOT is anticipated to increase borrowing prices from a record low on Wednesday. In order to avoid stalling the economy’s recovery from the pandemic, the authority defied the trend of central banks from India and the Philippines in raising interest rates.

Thai Government and Central Bank at Odds Over Rate Increases

However, the BOT’s rate decision this week may be measured. In a Bloomberg survey conducted as of Monday, 24 out of 27 analysts projected a quarter-point increase on Wednesday, with the remaining 3 predicting a half-point increase.

According to Arkhom, who said that he has spoken with BOT Governor Sethaput Suthiwartnarueput, the central bank must take into account how steps to control inflation may effect consumer and business costs. The finance head stated, “We have to balance, making sure we are on the path of recovery.

Through subsidies for diesel and power costs, the government, according to Arkhom, has also done its part to combat growing prices.

Tourism Increases

Stronger spending is already making a comeback in the Southeast Asian country as tourist picks up and household incomes begin to increase. According to the most recent government predictions, the number of international visitors could increase to 30 million from around 10 million this year.

Although growth in the three months to June “may not be so high” due to base-effect from a 7.7 percent GDP increase in the second quarter of 2021, he said, gross domestic product growth is anticipated to reach 3.5 percent for this year. On August 15, the government will release the information.

Poor Baht

Regarding the exchange rate, Arkhom stated that while exporters are content when the baht is trading at 34–35 per dollar, a stable currency is essential for businesses as it also drives up the cost of imports, particularly oil.

According to him, the central bank needs to be aware of how nations like the US, which has repeatedly accused Thailand of currency manipulation, regard intervention. The baht has had an approximately 8% decline over the last six months, ranking third worst among the major Asian currencies tracked by Bloomberg.

On Tuesday, the exchange rate rose as much as 0.9 percent to nearly a six-week high of 35.41 to the US dollar.


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Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.

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