BANGKOK: Bank of Thailand governor Veerathai Santiprabhob talked with the Bangkok Post to shed light on the decision to stay put on the policy rate at last week’s meeting, even as the Finance Ministry had called to ease it up. A rate cut against the backdrop of a global tightening could force the central bank to raise the policy rate quickly to catch up with other countries when the trend reverses, while the rate must be slashed aggressively to achieve targets in increasing domestic spending and fuelling inflation, he said. “It’s the central bank’s duty to look forward and manage the [interest rate] cycle smoothly, avoiding anything that could interrupt the trend,” said Mr Veerathai. “The main hurdle that prevents some groups from accessing bank loans is their borrowing capacity because financial liquidity is ample and the interest rate is pretty low now.”
The Bank of Thailand must consider three pillars — economic recovery, inflation and financial stability — in making a decision on the policy rate.
