Thai central bank signals it will stick to slow tightening

Bloomberg

Thailand will persist with its gradual approach to monetary policy tightening, a top central banker signalled, citing that the economy was better off compared to others on most parameters.
“You could expect not to be surprised,” Bank of Thailand’s Assistant Governor Piti Disyatat said at the Bloomberg Business Summit in Bangkok on Wednesday, when asked what to look for at the Bank of Thailand’s (BOT’s) next rate review on November 30. “You can expect continuation of what we are doing.”
Thailand is the least hawkish central bank in Southeast Asia, where even fellow rate laggards Vietnam and Indonesia have pivoted to delivering steeper increases to fight inflation and support their currencies. Still, the recent easing in Thai headline inflation and the strengthening of the baht gives policy makers room to go slow on tightening, while supporting the economy’s recovery.
Southeast Asia’s second-largest economy has raised the benchmark interest rate by a cumulative 50 basis points in the last two meetings to 1%. At the same summit earlier, Thai Finance Minister Arkhom Termpittayapaisith said the government won’t interfere in monetary policy making, and that the central bank understands the need to protect the economic recovery.
The BOT has to apply a “steady hand” and look at data before acting, Piti said, while not ruling out larger increases should the situation demand so.
For now, the nation has high foreign-exchange reserves and the economy is recovering thanks to the reopening and return of foreign visitors, he said, adding that the baht is little changed this year on trade-weighted basis. The baht’s 7% rally this month after sliding to a 16-year low in October had no major impact on the economy and the current level against the dollar is “acceptable.”
Thailand’s economy may have expanded more than 3% in third quarter from a year ago, while also expanding from the prior three months, driven by a better-than-expected recovery in foreign tourist arrivals, Piti said.
Official third-quarter gross domestic product data is due to be released on November 21.
The nation posted a surprise current-account surplus in September and with tourist arrivals gathering pace, the broadest measure of trade may get better in the fourth quarter. Tourist arrivals totaled 7.56 million as of October 30, with at least 1.5 million visitors a month expected during the remainder of the year, according to the government.
The central bank may raise its 2022 tourist arrival forecast from 9.5 million made in
September at the Monetary Policy Committee’s November 30 meeting, where it may also revise other macro-economic estimates, according to Piti.