BANGKOK (Reuters) -Thailand’s inflation is forecast to gradually speed up to within the targeted range of 1% to 3%, the Bank of Thailand said on Wednesday, with the rate expected to be low into early next year due to government subsidies but not reflecting deflation.
Inflation expectations in the short and long-term remained well-anchored, the central bank added.
The BOT forecast headline inflation of 1.3% this year from 1.6% projected earlier, while 2024 inflation was seen at 2.0%, not factoring in the impact of digital wallet spending, compared with 2.6% projected earlier. The BOT targets headline inflation in a range of 1% to 3%.
The headline consumer price index (CPI) fell 0.44% in November, though core CPI rose 0.58% during the month.
October and November headline inflation would have been +0.9% and +0.7%, respectively had it not been for government subsidies, BOT data showed.
The government has cut energy and electricity prices to alleviate the cost of living.
The country’s economic recovery is intact but structural impediments could limit the positive impact of the global economy on exports, and credit quality must be monitored, minutes of the Bank of Thailand’s Nov. 29 monetary policy meeting showed on Wednesday.
The BOT said financial conditions had tightened and it was monitoring the credit quality of small businesses and households.
At the meeting, the monetary policy committee unanimously voted to keep its one-day repurchase interest rate unchanged at 2.50%, the highest in a decade, after hiking it by 200 basis points since August last year to curb inflation.
The committee said the policy rate was appropriate for long-term growth, but it saw urgency in providing a lift to the economy including infrastructure investment and labour upskilling programmes, the minutes showed.
Southeast Asia’s second-largest economy grew much lower than expected at 1.5% in the July-September quarter from a year earlier, the slowest pace this year, on weak exports and government spending.
Prime Minister Srettha Thavisin has said the economy is in a “crisis”.
The central bank will next review policy rates on Feb. 7, when most economists expect no policy change.
($1 = 35.6700 baht)
(Reporting by Orathai Sriring and Chayut Setboonsarng; Editing by Kanupriya Kapoor and Jamie Freed)
