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Central bank to focus on interest rates


May 17, 2008

Central bank to focus on interest rates

The Bank of Thailand will not adopt policies that will hurt economic growth in the short term, central bank chief economist Amara Sripayak was quoted by Reuters as saying Friday.

"Our monetary policy should not slow economic growth in the short term and not cause people hardship," she told reporters. "Keeping interest rates steady could be tantamount to monetary easing," she added.

The central bank is due to review interest rates next Wednesday and is expected to keep its main rate unchanged at 3.25 percent as it juggles the need to control inflation, at a two-year high in April, without disrupting growth.

The Bank of Thailand (BoT) has kept the rate steady since July last year after five cuts in the year to boost demand and investment dampened by political uncertainty and a 2006 coup.

Finance Minister Surapong Suebwonglee said this week the government would focus on pro-growth policies despite rising inflation, adding that he was "concerned more about stagflation", a combination of high inflation and slow economic growth.

He is aiming for economic growth of 6 percent this year after 4.8 percent last year.

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