Bank of Thailand Governor Sethaput Suthiwartnarueput has dismissed market expectations that the central bank will keep interest rates unchanged for an extended period. In his first interview with Bloomberg News since taking office in October last year, he stated that the Monetary Policy Committee is not committed to maintaining the current rate level, and the next decision could be either a hike or a cut, depending on the data. He noted that there is insufficient evidence to support a rate increase or decrease, with the current rate at 1% after the committee voted to hold rates for the third consecutive time yesterday, in line with the forecasts of all 23 economists surveyed by Bloomberg News. While economists from Standard Chartered Plc and Maybank Securities expect rates to remain steady until the end of 2027, Governor Sethaput said that keeping rates low for a prolonged period carries risks, and a rate hike could be considered if inflation exceeds expectations or the baht depreciates rapidly. Conversely, a 'mini-Covid' economic downturn could justify a rate cut, but further reductions might offer limited benefits given already accommodative financial conditions, while incurring costs such as lower deposit returns and the risk of capital misallocation. Additionally, the central bank is actively managing the foreign exchange market to reduce volatility, ready to buy or sell dollars when the baht strengthens or weakens too quickly. The baht has fallen about 4% against the dollar this year but has outperformed many regional currencies, and in August it appreciated about 2%, ranking third-best in Asia. Governor Sethaput attributed the recent strengthening largely to movements in the US dollar.
Maybank Securities (Thailand) PCL
Standard Chartered PLC