Thailand’s One-Day Repo Rate Hiked to 2.25% from 2.0% as Expected

January 12, 2011

Thai monetary officials implemented the fourth interest rate increase in five meetings, lifting such to 2.25% from a cyclical low of 1.25% prior to mid-2010.  Policymakers met previously on December 1 and do not hold another meeting until March 9.  A lull in growth during the third quarter of last year proved brief, and Thailand is back near its long-term trend.  Exports and tourism revenues were better than expected last quarter.  Income and jobs are rising, and high capacity usage will provide an additional impulse for growth.  A statement from the Bank of Thailand today also noted diminishing global economic risks but, more importantly, projected rising headline and core price pressures due to elevated commodity prices and demand-pull strains.  Consumer prices rose 3.0% in the year to December, GDP growth hovered near 7.0% last year, and unemployment is below 1%.  Rates will need to be raised additionally before normalization is completed.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.



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