The Bank of Thailand expects the recent US military operation in Venezuela to heighten global uncertainty in three areas — military, trade and finance — this year and next.
Speaking at the central bank’s Monetary Policy Forum on Wednesday, Piti Disyatat, deputy governor for financial stability and a member of the Monetary Policy Committee (MPC), said the US operation increases geopolitical risk and is likely to intensify uncertainty across the military, trade and financial spheres.
He said the world is already facing rising tensions driven by ongoing conflicts and the increasing use of military force, with the US playing a pivotal role in reshaping global security norms, contributing to greater international uncertainty.
Mr Piti warned the US raid could trigger a new phase of the global trade war.
Over the past year, US trade policies have triggered widespread changes in global production networks and international trade structures, he said.
On the financial front, the military operation could heighten the risk of volatility in global monetary policy and financial markets, coinciding with an expected change in the US Federal Reserve chair.
“There could be significant implications for global financial conditions towards the end of the year, and the MPC will continue to monitor the situation,” said Mr Piti.
Regarding tensions between China and the US, he said relations between the world’s two largest economies have direct implications for Asia, and the central bank is monitoring developments to assess potential spillover effects.
Mr Piti said geopolitical consi- derations are increasingly outweighing economic factors, reflecting a rapidly shifting global political landscape.
“Geopolitical developments are becoming more influential in shaping regional dynamics and economic outcomes,” he said.
The MPC will continue maintaining an accommodative monetary stance to support the Thai economy, despite the US’s raid on Venezuela.
“The MPC assessed monetary policy could be made more accommodative, given the evident economic slowdown and rising risks, to ensure that financial conditions support economic recovery and help ease the debt burden of vulnerable groups,” said Mr Piti.
“A more accommodative stance would also enhance the effectiveness of other financial measures and government policies.”
According to the committee, interest rates among financial institutions and financial markets have declined in line with earlier policy rate cuts.
However, the transmission to financing costs has varied across different business and household segments.