Thailand’s recent interest rate cut was a “recalibration” rather than the start of an easing cycle, according to Bank of Thailand (BOT) Governor Sethaput Suthiwartnarueput, Bloomberg reports.
Speaking at the Institute of International Finance forum in Washington on Tuesday, the governor clarified that the BOT’s decision to lower borrowing costs was driven by the recent tightening of financial conditions in Thailand. He emphasized that the bank “does not see it as the beginning of an extended easing cycle.”
This statement comes after the BOT unexpectedly cut its key interest rate last week for the first time in over four years, defying previous resistance to government calls for easing monetary policy.
The governor also addressed the baht’s recent appreciation, stating that the BOT does not have a specific target for the currency but aims to prevent excessive volatility. The baht gained 14% in the last quarter, making Thai exports more expensive and hindering the competitiveness of the vital tourism industry.
Despite Thailand’s economy expanding at its fastest pace in five quarters during the April-June period, it continues to lag behind its regional peers. This is attributed to high household debt and a manufacturing sector struggling with competition from cheap imports, primarily from China.
