BANGKOK (Reuters): Thailand's low inflation is neither a sign of deflation nor an obstacle to economic growth, its central bank chief said, responding to a query from the finance minister as to why the rate has stayed below target this past 12 months.
In an open letter to the minister, dated April 1 and made public on Friday, Bank of Thailand Governor Sethaput Suthiwartnarueput said that going forward, inflation was likely to stabilise near the lower band of the 1% to 3% target range and could fall below in some periods.
The remarks comes after inflation in March slowed to 0.84%, according to the Commerce Ministry, which forecast a drop to about 0.15% in the second quarter on softer energy prices.
Inflation expectations were anchored in the target range, Sethaput said in the letter.
The central bank chief said low inflation has been driven by supply-side factors and had not impeded competition and investment.
Sethaput added the bank would ensure inflation would not be too high or too low and that monetary policy focused on managing economic risks.
The central bank cut the key interest rate by 25 basis points to 2.00% in February on weaker growth prospects. It will next review monetary policy on April 30.
(Reporting by Orathai Sriring and Thanadech Staporncharnchai; Writing by Chayut Setboonsarng; Editing by Martin Petty) - Reuters
