Thailand’s Eighth Central Bank Interest Rate Hike

July 13, 2011

By a unanimous vote, Thailand’s Monetary Policy Committee lifted its key interest rate to 3.25% from 3.0%.  Seven earlier hikes from a cyclical 1.25% lower were implemented in July, August and December of 2010 plus January, March, April, and June of this year.  Thai growth is solid in spite of the struggles of economies elsewhere in the world, but inflationary pressure in Thailand is also high, undesirably so, and is likely to persist because of planned policy changes by the newly elected government following elections earlier this month.  A statement from officials  suggests that more rate hikes perhaps as soon as next month are likely and asserts,

The prospective increases in the minimum wage and fiscal spending amid continued economic growth will likely add to inflationary pressure and may result in heightened inflation expectations.  In light of the continued risks to inflation amid robust domestic demand, the MPC deemed it necessary to continue increasing the policy rate to maintain economic stability and anchor inflation expectations.

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



Comments are closed.