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Home  >>   Daily News  >>   Thailand  News  >>   Economy  >>   Thai central bank raises interest rates
NEWS UPDATES Asean Affairs        10  March 2011

Thai central bank raises interest rates

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The Monetary Policy Committee of the Bank of Thailand on Wednesday raised the policy interest rate by a quarter percentage point to 2.5 percent. The move was widely anticipated in the financial press. The decision was aimed at boosting confidence among the public that the central bank was controlling inflation.

The MPC yesterday revised up the headline inflation rate, which includes oil prices and fresh food items, by 0.5 of a percentage point to 3-5 percent this year. The range of the core inflation rate remained unchanged at 2-3 percent.

The move is contentious as many believe inflation is still within an acceptable range and that the interest rate rise intended to curb those pressures was unnecessary.

Higher interest rates imposed by the central bank will hurt the economy and squeeze businesses, economists and businessmen say.

However, smaller businesses will face higher operating costs as a result.

Core inflation excludes the price of fuel and fresh food items which vary seasonally. The domestic inflation rate which stands at 3 percent so far this year is relatively low compared with other countries in the region, said Prayote Benyasut, acting director of the Bureau of Trade and Economic Indices.

Paiboon Kittisrikangwan, the central bank's assistant governor, said the MPC's decision to raise the policy rate was caused by the surge in oil and commodities prices which has increased inflationary pressure.

The decision was also aimed at boosting confidence among the public that the central bank was controlling inflation.

The MPC yesterday revised up the headline inflation rate, which includes oil prices and fresh food items, by 0.5 of a percentage point to 3-5% this year. The range of the core inflation rate remained unchanged at 2-3%.

The surge in oil and commodity prices will not weigh on the growth prospects of the Thai economy, he said.

The central bank, however, forecasts that if the average price of Dubai crude oil increases to US$120-130 a barrel, the global economy will be affected.

The Bangkok and Kasikorn banks yesterday raised their interest rates on both savings and loans in response to the MPC's policy rate hike.


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ASEAN  ANALYSIS

This year in Thailand-what next?

AseanAffairs  
04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More

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