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Thai central bank: no pressure from govt advisers


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August 6, 2008

Thai central bank: no pressure from govt advisers
The Bank of Thailand said on Tuesday there would not be pressure from the government’s new economic advisory team despite different views from some advisers and market concerns about the central bank’s independence, reported Reuters.

Reuters quoted assistant BoT governor Duangmanee Vongpradhip as saying, “We don’t see it as any pressure. In implementing economic policies, we need various views. Having different opinions is not wrong and the central bank has to listen.”
At the weekend, the government appointed a team of economic advisers, one of whom also sits on the new board of the central bank, raising doubts over the bank’s policy and independence.

Under new laws controlling the central bank, the 12-member BoT board -- now packed with government allies -- selects the bank’s seven-member monetary policy committee (MPC) and even has the power to fire the governor.

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The current MPC is due to be replaced at the end of this month. Nobody knows whether the BoT’s board will be able to meet to discuss replacements before the MPC holds its next rate-setting meeting on August 27.

Duangmanee said the economy was still not stable and the central bank needed to ensure economic stability while preventing inflation from rising too high in the long term.

“In the long run, the central bank does not want to see inflation staying at high levels despite easing energy and commodity prices. That can be seen from the central bank’s monetary policy,” she said.

The central bank raised its policy rates by 25 basis points to 3.50 percent last month, its first rise in two years, in its efforts to quell inflation, which jumped to a new 10-year high of 9.2 percent in July, up from 8.9 percent in June.

Economists expect the central bank to raise rates again at its next meeting on August 27.

The central bank, which has its priority on fighting inflation, signalled further rate hikes were needed if inflation remained elevated. The government, which has pushed pro-growth policies, fears higher rates will hurt economic growth and fuel discontent.

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