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00:00[CC may contain inaccuracies] Bang of Thailand has stood bad for a very long time. Is it inevitable that it raises rates. Come August. Well good morning. I'm actually thinking of my policy hasn't changed much since the beginning of the year. You know the main pressure points exact is actually to make this a rise in inflation. As you've mentioned. But under the bigger scheme of things the recovery is just beginning. In Thailand because we are lagging behind other countries given our heavy dependence on tourism. So the first priority is to make sure that the recovery takes hold and then gradually we normalize moderate policy. But recovery is already taking hold. We have tourism now getting getting a boost from the reopening of the border. How much room do you have to raise rates. How much room do you have to normalize rates. I mean we are at historic lows of our policy setting. So we do have some some some room to go in terms of going back to what's neutral. But in terms of the recovery it's begun. You're correct. But you know look at tourist numbers. Actually this year we're forecasting around 5 6 million compared to what a figure of 40 million that we had pre called it. So it's still quite a long way away. GDP for this year you know it's going to about three point three percent and picking up to 4 percent next year. So there are probably things going again for steam in the fourth quarter of this year. So at this stage we are still in the early phases of the recovery in that sense. Couldn't this yet that what's more important for you to be dealing with through Monday monetary policy the weakness of the baht or is it to this inflation problem that everybody is facing. Well the main thing as I said that is making sure that the recovery that that is beginning to see gains traction but also at the same time making sure that it doesn't add to the inflationary pressure which is quite high right now in terms of inflation story. It's it's clearly a supply side driven pickup in prices mostly external. We do projected to come down next year from a figure from six point two this year to to around two and a half percent next year with you know our range. So in terms of the broad scheme of things we want to actually make sure that the recovery is on a strong foothold. That doesn't add to inflationary pressure. The currency weakening is is something that most emerging markets is going through because the dollar has gained quite a bit of strength. So far it hasn't you know become disorderly in that sense. And we are looking at it just to make sure it doesn't add undue pressure on on inflation as well. Okay. With that in mind could this your dad you don't want to really in any way kind of hurt the economic recovery and wait for that to get to gather some steam. But I mean the minutes from your previous meeting in June from the NPC suggested that by delaying you could actually cause quite a lot of damage and indeed inflation pressures may cause greater cost to the Thai economy. That was the conclusion of that meeting. So what you're saying doesn't really fit very well with those minutes. No it's it's a delicate tradeoff. If we move too early and too much I think of you know we about to take off. You want to. You need to reach you know take off velocity. You don't want to slow down the plane too much before you reach that. And then lastly increasing altitude you don't want to go too fast and that's going to be next year. So the tradeoff between moving too early and too late is this is just to get it right. It's a narrow road that we're trying to steer but. In the in the broad picture looking at this two year horizon we do predict inflation going to come down and most of that is. Is this a mechanical result of of the supply shock not being long lasting. Getting new shocks in the next year or so. You know we we we do want to make sure that inflation doesn't become embedded in the system. That says the first and foremost concern. But the way we look at it now the pressures to ease quite a bit next year. And so it's it's. Yeah. That's how we leave you to picture right now. You talked about how yen board weakness is in line with the rest of the region currencies but the board is down 7 percent in the last three months. It is among the worst currencies in Asia behind only the Philippine peso and the yen. At what level and how much more weakness before you decide that it is important to intervene. Actually in the big scheme of things if you look here today from the beginning of the year the debate is actually in the middle of the pack in terms of regional currencies. You know we are down by around 6 percent gratitude to the U.S. dollar since the beginning of the year. Taiwan Philippines and Korea weaker. And Japan this is like minus 15 percent. So from a longer perspective it's actually you know we are in keeping with the key. If you look at our trade weighted basket the nominal effective exchange rate it's down 1 percent since the beating of the year. So there's short term fluctuations. But in the end the more you know longer time horizon I think we are still pretty much in line with most other countries. So at this stage we are just monitoring the developments and you know we also should recognize that we've been hit by a pretty big negative terms of trade shock and awe of 10 percent which is the biggest in the last couple of decades. Bye bye. By the nature you know that the price of imports has increased versus the price of exports. You do expect some weakening of the currency and that's part of the adjustment mechanism. But in terms of the magnitude since the beginning of the year I think we are still in line with most of the region's. Couldn't this yet. But what about the government itself. In what way are you coordinating monetary policy with fiscal policy and what more can be done in regard to that. There is a clear division of labor going on. I mean we definitely consult on economic developments in general but in terms the policy measures as a clear division of the government and Mr. Finance is looking in terms of measures to ease the burden from higher prices. This is either through measures that directly alleviate the price pressure including the energy subsidies and electricity subsidies. There's also a target of income support to to the more vulnerable groups of people who face higher living expenses. So that's what the minister of finance is focusing on. For the Bank of Thailand we are focusing on the big macro picture in terms of guaranteeing a smooth recovery. That does not add to inflation pressure in the medium term. Let's talk about the macro picture. We have a growing call for a recession in the US in Europe even in Japan. How might that play out. How concerned are you. What are your own expectations maybe for an open economy. We're definitely dependent on exports and also the state of the global economy. That's something we watch out for. Based on forecasts we did not forecast a recession for the global economy nor the US. It's a risk factor at this stage for this year. Most of the pickup in an activity is going to come from the return of tourism plus domestic demand. So I think that's pretty much resilient. I think next year is where the risk in terms of the global slowdown becomes more pronounced. And partly for that reason we want to move policy in normalize in a gradual manner. Just to to be open to developments.

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Bank of Thailand Says Top Priority Is Economic Recovery

Bank of Thailand Assistant Governor Piti Disyatat discusses the state of the economy, monetary policy and the local currency. A report showed Tuesday Thailand’s retail inflation accelerated in June to a new 14-year high, boosting the case for central bank to raise borrowing costs sooner than later. Piti speaks with Haslinda Amin and Rishaad Salamat on "Bloomberg Markets: Asia." (Source: Bloomberg)

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