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BOT decides to raise policy interest rate
The Bank of Thailand (BOT)’s Monetary Policy Committee
(MPC) has decided to raise the short-term repurchase rate (repo) by 25 basis
points from 4.75 percent to a new high of 5 percent, citing it is an
appropriate level for curbing the inflation rate and maintaining economic
stability.
Atchana Waiquamdee, the BOT’s assistant governor in charge of the Monetary
Policy Group, said that the MPC agreed at its meeting on Wednesday to raise
the 14-day repo with an immediate effect since the inflation rate had soared
higher than originally expected due to surging oil prices.
She conceded that demand in the private sector signaled weakness.
This, coupled with a slowdown in state investment, might slow the economic
growth in the following period.
Unless there are unexpected incidents, particularly an acceleration of the
inflation rate, MPC believes, the current interest rate level is appropriate
for maintaining the economic stability, which will also contribute to the
economic expansion in the long run.
Mrs. Atchana said the central bank would continue to keep a close watch on
rising fuel prices because they are a key factor to accelerate the inflation
hike.
She said the MPC’s decision to raise the repo was based on an assumption
that the crude oil price in Dubai averages US$64 per barrel, compared with
US$61.5 per barrel previously.
It is expected that the Dubai crude oil price will edge up to US$65-66 per
barrel in the remaining quarters.
Since the inflation rate has risen due to soaring fuel prices and a hike of
mini-bus fares and prices of consumers’ products under the control list,
the basic inflation is likely to exceed a target of 3.5 percent.
At present, the basic inflation rate is staying at 2-3 percent and the
general inflation rate at 4.5 percent.
Although MPC decided to raise the repo at the latest meeting, she said, the
actual interest rate remains in a negative territory.
The expected rise in the actual interest rate to the positive territory
mid-year might not occur because the inflationary pressure is much higher
than projected.
She said private investment had markedly slowed because the business sector
remains uncertain how the investment demand would increase, given the
current oil price hike and political impasse. (TNA)
Key sectors to help boost Thailand’s economic growth this year
Thailand’s key sectors, including the agriculture,
energy, tourism, export and investment sectors, will be major factors to
boost the country’s economic growth this year, according to the National
Economic and Social Development Board (NESDB).
In a report submitted to the cabinet at its weekly meeting, the national
think tank suggested that the government stabilize the growth of the
agricultural sector, boost productivity, local tourism, exports and investor
confidence, as well as accelerate implementing energy conservation drives in
order to support national economic growth later this year.
To stabilize the agricultural sector growth, the NESDB said measures should
be implemented to cushion farm product prices and to boost exports of
agricultural goods, including rice, fruits, vegetables and other crops, as
well as processed food, like chicken and shrimp.
Disbursements of investment budgets of government and state agencies should
also be accelerated to stimulate economic activities and growth in the
second half of this year and to meet the domestic investment expansion
figure of at least 8-10 percent this year as targeted by the government, the
NESDB suggested.
The national think tank, however, reported to the cabinet that it had
lowered the country’s economic growth rate this year to 4.2-4.9 percent,
from 4.5-5.5 percent forecast earlier in March, due to the impact of global
oil price hikes, rising inflation to around 4.5-4.7 percent on average this
year, increased interest rates and global economic slowdown which could
affect Thailand’s exports and economic expansion.
The country’s exports are likely to grow 13-15 percent this year, from the
government’s earlier target of 17.5 percent, due to the global economic
slowdown, according to the NESDB.
The national think tank suggested as well that when implementing macro
economic measures the government should always maintain the fiscal and
financial disciplines to keep the country’s key economic sectors in
balance and prevent economic stagnation.
The cabinet has, therefore, instructed agencies concerned to implement
measures suggested by the NESDB to help boost the country’s economic
growth later this year. (TNA)
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