By Suttinee Yuvejwattana
Nov. 11 (Bloomberg) -- Thailand's central bank should consider cutting interest rates because risks to economic growth have overtaken concerns about inflation, Deputy Governor Bandid Nijathaworn said.
``Inflation risk has eased substantially, while growth risks have increased,'' Bandid said in a seminar in Bangkok today. ``At our next meeting, there will be more of a need to use the key rate to boost growth.''
Thailand has so far refrained from joining its counterparts across Asia in cutting interest rates to support growth amid global financial and economic turmoil. Governor Tarisa Watanagase on Nov. 7 reiterated that the central bank is ready to ``adjust policy if needed'' as inflation risk has receded.
``This shift in focus is timely given that we have already seen signs of decelerating growth in Thailand,'' said Usara Wilaipich, an economist at Standard Chartered Bank Plc in Bangkok. ``A sharp drop in inflation, weakening economic activity, and the risk of delay in fiscal stimulus should provide sufficient justification for the Bank of Thailand to consider cutting rates sooner to support growth.''
Thailand's Cabinet last week endorsed a 100 billion baht ($2.9 billion) budget increase to stimulate the economy and help alleviate unemployment. Finance Minister Suchart Thadathamrongvej last month predicted that Southeast Asia's second-biggest economy may expand less than 4 percent next year, the slowest pace in four years, as export demand cools.
`Prevent a Hard Landing'
``Our role is to prevent a hard landing of the economy and make sure we have a soft landing,'' Bandid said today. ``We will make sure local spending grows and helps to counter the impact from slowing exports.''
The Bank of Thailand has kept the key rate on hold since raising it to 3.75 percent in August to quell inflation. Its next monetary policy meeting is scheduled for Dec. 3.
Consumer prices rose 3.9 percent in October, the weakest pace since December, as oil prices tumbled. The Commerce Ministry on Nov. 3 said inflation will keep slowing.
Emerging Asian economies, accounting for one-fifth of world growth, are being dragged down as the U.S., Japan and Europe contract, raising the likelihood of a global recession.
Central banks around the globe have trimmed interest rates to shore up confidence amid global financial turmoil. In Asia, India cut its benchmark repurchase rate for the second time in two weeks on Nov. 1. Japan lowered borrowing costs for the first time in seven years on Oct. 31. Australia, China, Taiwan and South Korea have also cut rates in the past two weeks.