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Thai central bank sees room to boost growth


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Thai central bank sees room to boost growth
The Bank of Thailand said on Tuesday there was room to use monetary policy to support economic growth if inflation eased, signalling that official interest rates could go lower, reported Reuters.

Deputy Governor Bandid Nijathaworn said the economy would be more challenging next year and might grow by less than 4 percent due to the global economic slowdown.

"With our policy rate of 3.75 percent, there is still room to use it to help boost growth," he told an economics seminar.

The central bank raised its benchmark rate twice in July and August to fight inflation, running at a 10-year high of 9.2 percent in July.

It kept the rate steady at 3.75 percent this month, seeing no need to tighten further after inflation slipped to 6.0 percent in September and shifting its focus to the risks to growth.

It said it stood ready to implement appropriate monetary policy should the Thai economy worsen. It will review rates again on Dec. 3.

Last Friday, the central bank cut its 2008 economic growth forecast to 4.3-5.0 percent from 4.8-5.8 percent and said it expected 2009 growth to be 3.8-5.0 percent. Growth in 2007 was 4.8 percent.

Bandid reiterated that the Thai banking sector had no liquidity problems, but said the central bank was ready to inject additional liquidity into the system if that became necessary.

"Liquidity is still normal and is sufficient for loan growth, but we have to see whether lending slows down in the future," said Bandid, who oversees financial institutions.

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