ID :
12785
Thu, 07/17/2008 - 11:12
Auther :

Thai central bank raises policy interest rate quarter point to 3.5%

BANGKOK, July 17 (TNA) -- The Bank of Thailand (BOT) Monetary Policy
Committee (MPC) on Wednesday increased its interest rate by 25 basis
points to 3.50 per cent annually with immediate effect to stave off rising inflation in the country, BoT assistant governor Duangmanee Vongpradhip said Wednesday.

The hike in the policy interest rate, the first since last August, had
been widely anticipated. The decision was made, according to Miss
Duangmanee, after it was found that inflation risks could jump and erode
private sector confidence, affect economic growth, and impact export
competitiveness if domestic consumption does not improve.

If the policy interest rate is not increased, core inflation could exceed
the target of around 0-3.5 per cent, she said. The MPC is prepared to
implement stricter monetary policy to curtail inflation if it continued
rising, and will adjust the policy interest rate again in its next meeting
to control the country's inflation at an appropriate level.

The hike in the policy interest rate came after inflation in June surged
8.9 per cent, somewhat higher than the 8.5 per cent forecast earlier by
many analysts. It was the highest level in almost a decade.

Kasikorn Research Center has forecast that Thailand's inflation is likely
to exceed 9 per cent in July and penetrate the double-digit 'ceiling' in
August due to the continued increase in consumer product prices fueled by
relentlessly rising fuel prices.

Core inflation in June also soared 3.6 per cent, Thailand's highest in
almost 10 years. It was also the first time the rate stayed above the
inflation target range of 0-3.5 per cent set by the central bank.

"The increased inflation has negatively affected several factors,
especially people's saving, eroding consumer and investor confidence and
the MPC must closely monitor to make sure that inflation stays at an
appropriate level," Miss Duangmanee said.

Besides rising inflation, real deposit and lending interest rates
contracted 6.6 and 1.65 per cent respectively.

The liquidity of commercial banks is still ample, she added, and lending
is not a problem. (TNA)

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