Central bank governor
Kampon Adireksombat, head of the
Rising inflationary pressure is another contributing factor, since a move to fix the prices of commodities and liquefied petroleum gas is expected in the short term.
The consumer price index continued its upward trend last month to reach a 14-month high. Headline inflation was 2.62% in May versus 2.45% the previous month, driven by higher food and energy prices.
Despite looming inflation,
Mr Kampon said the committee is likely to wait for further developments such as a rate rise by the US Federal Reserve or stronger domestic growth before raising its own policy rate.
Santitarn Sathirathai, head of
"While the worst in terms of growth is probably behind us, full economic recovery will take time, given that weakness in the economy was not just about political instability but also high household debt, weak farm prices and lacklustre export growth," Mr Santitarn said.
He expects GDP and export growth to guide the central bank's decision-making, in addition to tourism, consumption and investment.
Mr Santitarn added that inflation and global interest rates also matter but are less important at present.
Charl Kengchon, managing director of
Amonthep Chawla, head of research at
Maintaining a low policy rate amid rising inflationary pressure would result in a negative real interest rate, he said, which might encourage speculation in risky assets.
Since the Federal Reserve is likely to completely halt its monetary stimulus scheme by year-end, regional central banks are expected to increase their interest rates accordingly to safeguard against fund-flow volatility, making it inappropriate for the Bank of
The central bank could either maintain its 2% policy rate until year-end if the economic outlook remains murky or raise the rate in the case of a strong recovery, Mr Amonthep said.
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