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Thailand BoT sees no need for policy interest rate cut


November 15, 2007

THAILAND : Interest rates policy
BoT sees no need for policy interest rate cut
Bank of Thailand Governor Tarisa Watanagase on Tuesday indicated it remained unnecessary to cut the policy interest rate to stimulate the country's economy since she believed it would continue to grow next year.

Delivering a keynote speech on "Thai Economic Directions and Trends Next Year" at the central bank's office in the northern region, she said that the economy had experienced many negative factors in the past year including political uncertainties, violence in the deep South, baht volatility, and oil price surges.

However, she believed the economy would improve next year although some factors, particularly oil price hikes and the sub-prime lending woes in the United States, must continue to be closely monitored.

She projected the economy would expand by 4.3-4.8 per cent this year and 4.5-6 per cent next year.

To meet the target, the government must focus on stimulating private consumption and investment to help boost the economy, she said, adding that the inflation rate in October is not so high.

"We see no need for now to cut the policy interest rate to stimulate the economy next year because many economic indicators clearly show the economy has begun to recover," she said.

Tarisa expressed confidence the central bank would control the inflation rate in a target range of 1.8-2.3 per cent.

She said all parties must make their own estimates and consider whether or not the economy was affected by overreliance on external factors.

The BoT chief said exporters must pay greater attention to hedging against currency exchange risks because the fluctuation would be a key pressing factor to the baht in the future.

Courtesy TNA

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