Thailand faces inflation control challenge amid energy crisis

Bangkok (VNA) - Amid mounting pressure from the war crisis, which has sent ripple effects through global energy prices and raw material costs, Thailand’s monetary policy is facing a more difficult challenge, especially in weighing inflation control against the need to keep the economy from losing momentum.

Vitai Ratanakorn, Governor of the Bank of Thailand (BOT), was quoted by local media as saying that this round of inflation has its roots in the supply side, meaning an interest-rate increase may not be the most effective answer.

Vitai said that, in conducting monetary policy amid the crisis now being faced, the BOT may not yet need to raise interest rates because the inflation now occurring is being caused by the supply side, such as energy prices and raw materials, and a rate rise will not be able to solve the problem.

On measures to help debtors and the public, BOT recently rolled out a first phase, asking financial institutions to take greater care of debtors, with a focus on adding liquidity and restructuring debt.

These include easing repayment burdens and encouraging commercial banks to assist customers, alongside collateral-based lending, or lending based mainly on collateral, which forms part of the “Secure+” programme to help customers gain better access to credit by relaxing various credit assessment criteria and excluding the impact of oil prices and the war from lending consideration.

This measure will be only a short-term step lasting 12 months.

This tool was previously used during the COVID-19 period. Even so, soft loans are only one of the tools still under consideration, and any move would have to go through the government process before being submitted to the Cabinet for further consideration.

If the situation remains severe, measures used in the past, such as interest-rate cuts, debt moratoriums and the “Fa Som” programme, a long-term debt restructuring scheme, would be considered at the next stage./.

VNA