(Bloomberg) -- Thailand’s central bank should take into account the risks the nation’s economy faces including its fragile recovery when deciding monetary policy, according to Prime Minister Srettha Thavisin.
Decade-high borrowing costs at 2.5% “may affect the nation’s economic recovery and the well-being of the people,” Srettha said in his speech to the parliament on Wednesday. He presented to lawmakers a 3.48 trillion baht ($102 billion) budget for the fiscal year to Sept. 30 that will entail 693 billion baht in deficit.
Bank of Thailand has raised the benchmark repurchase rate by 200 basis points over a 13-month tightening campaign based on the assumption of a “good” economic recovery, the premier said. Inflation, which is forecast to fall for a third straight month in December, is a reflection of a slowing domestic economy, he said.
“The monetary policy going forward should be in line with economic trend, tighter financial conditions and additional boost from the government policies,” Srettha said. On the fiscal side, he said, incurring a budget gap will help support the economy.
The premier has repeatedly said the Thai economy is in crisis and dismal domestic activity has prompted Srettha to push for a $14 billion cash handout program that’s being opposed by some central bankers and economists.
The premier, who last year said he wanted to accelerate annual growth to 5% during his term, said Wednesday that gross domestic product expansion this year will likely be at 2.7%-3.7%, compared with an estimated 2.5% in 2023.
Southeast Asia’s second-largest economy faces multiple challenges including the impact from El Nino, high household debt, slowing global trade and geopolitical tensions, he said.
The BOT, which in November halted eight straight interest rate increases, will next meet on policy rate on Feb. 7. The government is scheduled to report full year 2023 GDP on Feb. 19.
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