BANGKOK (Reuters) – Thailand’s low inflation means there is room for an interest rate cut to boost economic growth and help weaken the baht
Sixteen of 26 economists polled by Reuters predict the Bank of Thailand will leave the key rate unchanged at 2.25% on Wednesday.
“If we reduce interest rates, it will help heat up the economy so this year we’ll be able to maintain the momentum of the economy,” Pichai Chunhavajira told reporters.
“Our inflation has been consistently low so we can reduce interest rates because if inflation is low for a long time, it will affect producers as the price of goods is low.”
Annual headline inflation was 1.32% in January, after averaging 0.4% last year, well below the central bank’s target range of 1% to 3%.
Pichai pledged more measures to help address the country’s stubborn household debt problem and urged banks to lend more and the central bank to be more flexible with loan-to-value rules to support the property sector.
He also said a weaker baht is important for export-driven Thailand, adding: “every exporting country wants its currency to weaken.”
The baht has risen 2.5% against the dollar since the start of the year
Pichai said the issues of inflation, household debt, lending, the baht and rates had been discussed with the central bank.
(Reporting by Kitiphong Thaichareon and Orathai Sriring; Editing by Martin Petty)
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