(Bloomberg) -- Thailand is unlikely to tighten monetary policy aggressively as inflation remains low and the economy needs support, the chairman of the nation's central bank said.
At the same time, the current pace of annual economic expansion of about 4 percent is sufficient to begin policy normalization, Porametee Vimolsiri said in an interview. He stressed he was talking generally about the possible tightening cycle, rather than about the rate decision due Wednesday.
"The economy faces downside risks next year," Porametee, who is not a member of the monetary policy committee, said Tuesday in Bangkok. "Growth will slow, mainly because of uncertainties stemming from trade protectionism."
Most of the economists in Bloomberg's survey expect the central bank to raise the key rate tomorrow for the first time since 2011, by 25 basis points to 1.75 percent. The monetary policy committee recently signaled concern about financial-system vulnerabilities after a prolonged period of low borrowing costs, as well as a desire to build policy space for the future.
As chairman, Porametee oversees the bank's operations. He is also permanent secretary in the Ministry of Social Development and Human Security.
Bank of Thailand Governor Veerathai Santiprabhob said in November that if Thailand does raise rates, it would hike and then pause to assess the outlook.
To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net
To contact the editors responsible for this story: Sunil Jagtiani at sjagtiani@bloomberg.net, Nasreen Seria
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