By Orathai Sriring and Thanadech Staporncharnchai
BANGKOK (Reuters) -Thailand’s central bank is ready to adjust monetary policy if the outlook changes as the economy is facing heightened uncertainty over geopolitical issues and the economic policies of major trading partners, officials said on Monday.
Monetary policy will depend on the economic outlook, while data will be used to assess the outlook, said Deputy Bank of Thailand Governor Piti Disyatat.
“If the outlook changes significantly or the risks to the outlook change significantly, it is a reason to adjust the policy,” he told a monetary policy forum.
Last month, the Bank of Thailand left its key interest rate unchanged at 2.25%, after a surprise cut in the previous review in October. The next rate review is on Feb. 26.
Central bank officials said on Monday the decision to hold the key interest rate steady was a “robust policy”, as monetary policy becomes less effective under high uncertainty.
“According to the BOT’s study, a key message is that cutting the policy interest rate will have a limited positive effect on the economy during a period of high uncertainty,” Senior Director Surach Tanboon said.
The implementation of monetary policy must be flexible and able to accommodate various situations, Assistant Governor Sakkapop Panyanukul said.
“We use the term a robust policy, including trying to give importance to policy buffers in various aspects and combining policy tools appropriately with developments,” he said.
At last month’s review, the central bank maintained its forecast for economic growth at 2.7% in 2024 and 2.9% in 2025.
Southeast Asia’s second-largest economy is expected to have grown more than 3% annually in the last quarter of 2024, Sakkapop said. Fourth-quarter gross domestic product data is due in February.
The economy was likely to grow closer to potential, driven by exports, tourism and domestic demand, the central bank said in a paper prepared for the forum. Potential protectionism from the United States under incoming President Donald Trump could drive more Chinese goods to Thailand, the paper added.
Thailand’s baht currency is expected to be more volatile this year, driven by global factors, Sakkapop said.
“In terms of direction (of the baht), we must manage the volatility that will continue to increase,” he added.
