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Thailand shrugs off inflation pressure


April 25, 2008

Thailand shrugs off inflation pressure
Philippines holds rates

Despite the rising inflation driven by soaring food and commodity prices, Thailand said it seesno cause for concern while in the Philippines, the central bank is keeping the rates unchanged.

Thailand's Finance Minister Surapong Suebwonglee said on Friday that inflation is not expected to be a problem in the country, and that he would like to see the Thai baht move in line with other Asian currencies, reported Reuters.

“Since Thailand is a net exporter of rice and food, we are not aware that inflation will be a problem in Thailand. Our principle is that we will like to have the Thai baht move in line with other Asian currencies,” the minister was quoted as saying on the sidelines of a conference in Singapore.

On Tuesday, the Bank of Thailand predicted annual inflation, driven by soaring oil and food prices, would accelerate to 4.0-5.0 percent in 2008 from 2.3 percent in 2007.

Thailand's annual inflation jumped to a 20-month high of 5.4 percent in February before easing slightly to 5.3 percent in March.

In the Philippines, the central bank on Thursday announced that it will keep the overnight interest rates unchanged even though the country faces growing inflation pressures.

In a notice posted on its website, the Bangko Sentral ng Pilipinas said its stance of monetary policy continued to be appropriate for the present.

The overnight borrowing rate is 5 percent and the overnight lending stands at 7 percent.

“The factors driving inflation have come mostly from the supply side, and the use of monetary instruments against such influences has limited effect compared with direct supply-side intervention measures,” the central bank said.

Though the announcement came as expected, central bank Governor Amando Tetangco said that the rates might be adjusted once the inflation runs out of track.

Rising costs of fuel and rice imports have pushed the country’s inflation to a 21-month high of 6.4 percent in March. The government vowed to tame the inflation to 3-5 percent for the whole year but critics have said it would be a difficult goal to achieve if the central bank refused to raise rates at proper time.

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