The key rate in Thailand is close to where it should be, and the head of the central bank said that politics won’t change policy

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On Wednesday, the head of Thailand’s central bank said that the current amount of the benchmark interest rate was almost right. He also said that a delay in forming a new government would not change monetary policy.

Since August of last year, the Bank of Thailand (BOT) has raised its key rate seven times, all the way up to 2.25%, to slow inflation and help the economy revive smoothly.

Governor Sethaput Suthiwartnarueput told a central bank seminar that as long as the recovery was still going strong, the BOT would make sure that its monetary policy was good for the long term and that inflation would stay in the goal range of 1% to 3%.

“It’s close to a balanced point, where the key rate lets the economy grow as much as it can and inflation stays within the target range,” he said. “This makes the economic system less vulnerable.”

The governor said that a delay in forming a government after the May polls would not affect how the central bank’s policies are carried out, but it would affect how money moves and the value of the baht.

“Recently, the baht has been weaker because of political factors that have caused uncertainty,” he said. So far this year, the baht has dropped 2.5% of its value against the dollar.

Thailand has had a caretaker government for five months because the Move Forward party, which won the poll, has not been able to form a government.

Sethaput said that the headline rate of inflation was lower than expected, but that it would soon go back to the goal.

The governor said last week that the BOT might keep the key rate the same or raise it at its next policy meeting on Sept. 27.

The meeting minutes from August 2 also said that policy rates were getting close to levels that are stable.

Southeast Asia’s second-largest economy has been driven by consumer spending and tourism. This year, Sethaput said, 29 to 30 million foreign tourists are expected to visit.

He also said that the GDP numbers for the second quarter might not be “that good” because exports were not as strong as expected.

The economy grew 2.7% from the same time last year to the first quarter. On August 21, the official GDP figures for the second quarter will be made public.