Unlike in the past, any policy tightening will not be continuous and will be data-dependent, Veerathai Santiprabhob told reporters.

“Accommodative policy is still needed for the Thai economy but the need for extra accommodative policy has reduced,” he said.

On Wednesday, the Bank of Thailand (BOT) hiked its key policy rate by 25 basis points to 1.75% to curb financial stability risks and to start “building policy space” – giving it room to cut the benchmark if global conditions deteriorate.

After the increase, the rate is still only 50 basis points above the all-time low. The previous time the rate was hiked was August 2011.

The BOT will next review monetary policy on Feb. 6.

The policy rate hike is not expected to prompt an increase in lending rates by commercial banks because of high liquidity in the banking system, Veerathai said.

While economic growth is expected to slow to 4% next year from 4.2% seen for 2018, the pace will still be in line with the country’s growth potential and higher than an average rate over the past 10 years, he said.

Last year, Southeast Asia’s second-largest economy expanded 3.9%, the fastest pace in five years.