Thai monetary policy can remain accommodative despite higher U.S. rates - central bank chief

Thai monetary policy can remain accommodative despite higher U.S. rates - central bank chief
Thailand's Central Bank Governor Veerathai Santiprabhob smiles during an interview with Reuters at the Bank of Thailand in Bangkok, Thailand, January 24, 2017. REUTERS/Matthew Tostevin
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CHIANGMAI, Thailand (Reuters) – Thailand’s central bank can continue its accommodative monetary policy to aid the country’s economic recovery, although the U.S. Federal Reserve keeps raising its interest rates, the central bank governor said on Saturday.

“Thailand’s monetary policy still needs to be conducive to the economic recovery,” Bank of Thailand Governor Veerathai Santiprabhob told reporters.

Growth has yet to be sustained and broad-based while there is no concern about inflationary pressure, he added.

The central bank is not worried about capital outflows in the wake of higher U.S. interest rates as Thailand’s external position remains strong with high foreign reserves.

However, the BOT will still have to monitor the pace of inflation and rate increases in major countries, Veerathai said.

The central bank forecast headline inflation of 0.7 percent this year and 1.1 percent next year, compared with its target range of 1-4 percent.

The BOT has left its policy interest rate unchanged at 1.50 percent, near the record low, since April 2015.

It next reviews policy on Feb. 14. Most analysts expect no policy change in 2018, while some forecast a hike in the second half of the year.

On Dec. 20, the BOT raised its economic growth forecast for this year for the fourth time, to 3.9 percent from 3.8 percent. It also lifted its 2018 projection to 3.9 percent, from 3.8 percent.

Last year’s growth was 3.2 percent, still lagging regional peers.

(Reporting by Kitiphong Thaichareon; Writing by Orathai Sriring; Editing by Andrew Bolton)

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