Bank of Thailand hasn’t closed door to further easing

BANGKOK: Thailand’s central bank has not shut the door to further monetary policy easing should the economy worsen, the governor said yesterday, after two rate cuts this year to support flagging growth.

The Bank of Thailand (BOT) last week left its policy rate at 1.25%, a record low last seen during the global financial crisis. It will next review policy on Feb 5.

“We did not say we had closed the door,” Veerathai Santiprabhob told a business seminar. “If the economic situation is worse than expected, the monetary policy committee is ready to use tools to help lift growth.”

Last week, the BOT lowered its 2019 economic growth forecast to 2.5% from

2.8%, and next year’s outlook to 2.8% from 3.3%. Last year’s expansion was 4.1%.

Although Southeast Asia’s second-largest economy is expected to perform better next year, the pace of growth is still unsatisfactory, Veerathai said.

“Growth of 2.8% is still below potential and we are not satisfied with that,” he said.

“Our potential (growth) is 3.5%-4.0%, and it will be higher if there are structural reforms,” he said, adding the country needed to promote investment, increase competitiveness and develop technology.

Veerathai also said the strength of the baht currency has been driven by external factors and Thailand’s large current account surplus, which is expected to be US$35 billion (RM144.9 billion) this year and US$30 billion next year.

The BOT has steadily taken action on any excessive moves in the baht and will continue to do so, he said, noting the currency is likely to remain volatile.

The baht has been Asia’s best performing currency this year, up 7.7% against the US dollar, putting more pressure on the tradereliant economy amid global trade tensions.

In another development, Thailand’s commerce ministry said customs-cleared exports in November fell 7.39% from a year earlier, after falling 4.54% the previous month. November’s trade surplus amounted to US$550 million, against October’s surplus of US$510 million. In January-November, exports contracted 2.77% from a year earlier and imports fell 5.22%. – Reuters