Kitiphong Thaichareon, Orathai Sriring

BANGKOK, (Reuters) – Thailand is not required to increase interest rates after the Federal Reserve raised U.S. rates. Domestic factors and economic recovery will determine policy, said the chief of the central bank.

Reporters were told by Sethaput Suthiwartnarueput, Bank of Thailand Governor, that the country has a strong external position with high foreign debt and international reserves. He spoke to them at a side event of a seminar on business.

According to him, capital movement was not a problem.

Sethaput indicated that although volatility in baht has been caused by external factors (including the Fed rate trend), the BOT will be closely monitoring it to see if any impact is made on smaller businesses.

However, he declined to confirm whether or not the BOT intervened for the baht which is trading at its lowest point in nearly five years in relation to the dollar.

BOT’s benchmark rate has been set at record low 0.50%, since May 2020. Analysts expect that the BOT will not change its policy anytime soon.

Arkhom Termpittayapaisith, the Finance Minister, stated that fiscal and monetary policy were working together to support the economy.

Sethaput claimed that the BOT would prevent any disruption to the current economic recovery. It has been slow and uneven with vital tourism sectors still behind.

According to him, the next task is to complete the “recovery uninterrupted” and to take the process as smooth as possible.

Sethaput indicated that, despite the higher prices, there wasn’t any risk of inflation as the economy was still growing. This is likely to be more than 2% in this year thanks to tourism and exports.

The number of foreign tourists will exceed the 5-6 million forecasted in 2019, compared to nearly 40 millions for 2019.

Sethaput said last month that tourism may not be back to its pre-pandemic level until 2026. The BOT will continue to support growth, even as rising global prices push their peers to raise interest rates.

The BOT also needs to revise its growth forecast for 2022 at this rate meeting. It currently stands at 3.2%. Sethaput stated that the BOT was very close to Sethaput’s assessment of the state planning agency’s expected growth rate of 2.5-3.5% for this year.