Inflation in Thailand is likely to be below the Bank of Thailand’s forecast of 2.8% this year and to ease further next year, governor Vitai Ratanakorn said on Saturday.
Monthly inflation in the fourth quarter is now expected to be less than the 4.5% previously projected, he said, allowing the central bank to navigate through temporary price pressures.
Headline inflation slowed to 2.42% in June, remaining within the central bank’s 1-3% target range and below expectations.
The impact of the energy price spike caused earlier by the Middle East war has turned out to be not as severe as many economists had forecast.
Oil prices last week returned to pre-war levels around $70 a barrel, but they rose about 4% this week as the US and Iran engaged in tit-for-tat strikes.
Mr Vitai said last month that there was no need to raise interest rates, and the central bank left its key rate unchanged at 1.00% at its meeting on June 24. The next monetary policy review is on Aug 26.
Any further rate reductions would not be easy as the current level is already very low, and keeping rates too low could hurt savers and have broader negative impacts, Mr Vitai said.
Southeast Asia’s second-largest economy has been resilient, with the central bank’s 2.3% growth forecast for this year seen as “not good, but not bad”, Mr Vitai said. The economy expanded 2.4% last year, lagging regional peers.
