Yesterday (June 14), the Bank of Thailand (BOT) organized a Monetary Policy Forum to clarify monetary policy guidelines. and inflation outlook going forward to analysts. Overall, the Thai economy continues to recover. But there are also many risks. accept monthly inflation May increased by 0.53%, lower than expected by the Bank of Thailand, while monetary policy is still accommodative. while the policy interest rate can continue to rise Because it hasn’t reached the normal level yet.
Mr. Piti Disayatat, Assistant Governor for Monetary Policy Group, said that overall the Thai economy continued to recover. At the moment, the value of the Thai economy has returned to the pre-Covid-19 stage, but has not yet recovered to its potential level. This part is a new lower potential level. from the original potential that had been achieved in the previous period Because of the impact of COVID-19, however, the BOT expects that the Thai economy will grow to its original potential in the future.
While the inflation rate in the medium term may reach the inflation target level, but in the next 1-2 years, the global inflation rate is still at a high level. This will continue to affect Thailand’s inflation. In particular, Thailand’s core inflation rate that the BOT views that this year and next year will be at 2%, so must be closely monitored.
“however in the implementation of monetary policy in the future that What the Monetary Policy Committee (MPC) uses to consider is the outlook of the Thai economy. As for the foreign economic outlook will be taken into consideration only when it is significant to the economy Be it inflation, economic conditions or monetary conditions. In the past, the economic cycle of Thailand and the US are different. of the United States will recover faster and stronger The part of Thailand gradually follows. So next year, I think it’s still a different direction. of Thailand is gradually recovering next year and The MPC still believes that it is appropriate to implement the policy in the current manner that normalizes interest rates.”
As for concerns that during the absence of a new government Fiscal policy may not be able to work at full capacity. Mr. Piti said There is not enough clarity at this time. But it is quite clear that the 2024 budget may be delayed by one quarter and sees that there is still enough time to wait and see the clarity of the government that will come in first.
Indicates that at the end of the year, inflation may rise again
Mr. Surat Tanboon, senior director The Bank of Thailand’s Monetary Policy Department said last month’s drop in inflation was considered a short-term decline. because there is a measure to help with electricity bills as a special case and the base in the previous year was higher from world oil prices. While the inflation trend in the future will be stable at this level. But from the valuation of fresh food Product prices may increase. and other components of inflation that are still viscous There is still a chance that inflation at the end of this year may rise, while in 2024 inflation will remain at a high level. The headline inflation rate is expected to be at 2.5% this year. remained at a high level compared to the past and a slow decline compared to the general inflation rate It is expected that this year’s core inflation rate will be 2.0%.
However, there are factors that may cause inflation to be higher than the base case, namely, the transmission of costs that may be higher and faster than expected must be monitored. from costs that operators have not yet passed The recovery of the tourism sector may recover more than expected. and higher fresh food prices According to the entry into the El Niño state, which the BOT has now placed this risk that will cause high inflation to increase by 0.15%, which is still lower than the impact in the past at 0.3%, must be monitored In addition, the new government’s economic policies, such as the minimum wage increase policy, must also be monitored. If the price of Dubai crude oil increases by about 10 dollars / barrel or 10% from the price estimated by the BOT. May result in headline inflation for the whole year increased by 0.50% from the expected level.
Interest rates can continue, do not trust inflation to plummet.
While Mr. Purichai Rungcharoenkitkul, director of the Monetary Policy Department of the Bank of Thailand, outlined the key issues in monetary policy implementation that The main objective of monetary policy is to enable the economy to expand continuously and return to its potential level. While inflation can sustainably return to the target range In terms of the policy interest rate must be the level of interest rate suitable for the economic structure and help maintain long-term economic stability. At the moment, the real policy interest rate has not reached the point where The Bank of Thailand has set a target
“It has to be understood that we are coming from a record high inflation. And many countries around the world are still fighting to reduce inflation. But I think it’s too early to say we’ve beaten inflation. as a policy maker cannot be complacent.”
The Thai economy continued to expand.
Mr. Sakkapop Panyanukul, Senior Director The Bank of Thailand’s Macroeconomic Department said that the Thai economy in 2023 is expected to expand at 3.6% and in 2024 at 3.8%, with the Thai economy this year having significant momentum from the tourism sector and private consumption. While the export sector recovered gradually. The number of tourists in the first quarter of this year is higher than expected in almost every nationality, with the BOT expecting the number of foreign tourists for the whole year to be 29 million and increase to 35.5 million in 2024, while the export sector This year is expected to be -0.1%, which will see better growth in the second half of the year. And Thai exports are expected to turn positive at 3.6% in 2024.
Mr. Sakaphop also said that the factor that supports the Thai economy this year is the number of tourists is more than expected. and policies to stimulate the economy of the new government more than expected While there are still risk factors, namely, the global economy is recovering more slowly than expected. and political instability within the country.
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