The Bank of Thailand stands ready to cut interest rates despite standing pat at the last six policy meetings, said governor Veerathai Santiprabhob in an exclusive interview with CNBC.
"We made it explicit that we are ready to act further to reduce the rate if need be, if certain global conditions do not turn out as we expect. The fact that we have negative inflation now is because of the oil prices, came down very quickly from a very high base," he said.
"Going forward, if oil prices do not come down sharply, the base effect will no longer be there, inflation should return to positive."
Thailand's central bank cut the benchmark interest rate in March and April last year unexpectedly in two back-to-back meetings to spur inflation and boost growth.
Its benchmark interest rate is now at a five-year low of 1.5 percent and while the BOT is not ruling out the possibility of further cuts, it is aware of the possible risks of keeping borrowing costs low for an extended period of time.