Inflation in Thailand will be largely “contained” as price pressures in the country are not as widespread compared to some developed markets, the Governor of the Bank of Thailand said.
Sethaput Suthiwartnarueput said headline inflation will remain within the central bank’s target range of 1% to 3%.
Although inflation was around 3.2% in January, “we continue to think it is likely to be contained and that we are unlikely to see inflation as high as we have seen in developed markets.” the governor said. told CNBC “Street Signs Asia” on Monday.
The main reason is that inflationary pressures are concentrated mainly in areas such as “energy space and the prices of certain types of important food, such as pork,” he explained.
On Wednesday, Central Bank of Thailand keeps key interest rate unchanged at a record low of 0.5%, and said in a statement the economy will continue to recover and the rapidly expanding omicron variant will “put limited pressure on the public health system.”
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“In the coming period, it remains necessary to closely monitor the dynamics of world energy prices and domestic prices for goods and services, as well as the possibility of increasing pressure on wages,” the central bank said.
External stability remains steady
“We look good. We have a very high level of foreign exchange reserves, a low level of external debt, and our current account is largely balanced,” the governor said.
The Fed has indicated it may soon raise interest rates for the first time in more than three years as part of a broader tightening of loose monetary policy. Major central banks around the world cut interest rates at the height of the pandemic in an attempt to spur growth as Covid-19 took its toll, but the Fed has since signaled it is preparing to raise rates again.
“The stress that comes from tightening global financial conditions on that front — I think we have a lot of wiggle room compared to other emerging markets,” he added.
However, risks remain, the governor said, as the country’s economic recovery remains fragile and precarious.
“A lot of our recovery depends on what happens to our tourism recovery,” Sutivartnaruput said.
He said the government is also concerned about future Covid options.
“If somewhere in the winter, close to the tourist season, there is a new option, it will be … a risk that worries us,” he added.
According Thai Central Bank, the number of foreign tourists arriving in December, especially from Europe, increased from the previous month after seasonal adjustment.
However, the number of foreign tourists remained low as international travel restrictions remained in place in many countries.
According to the governor, tourism has a more significant impact on wages and employment in the country.
“Employment in the tourism sectors that are directly or indirectly linked accounts for approximately one-fifth of our workforce. Therefore, without the restoration of tourism, it is very difficult for us to see everything returning to normal,” said Sutivartnaruepu. .