Thailand: Central Bank raises interest rates again in January
January 12, 2011
At its monetary policy meeting held on 12 January, the Central Bank of Thailand (BoT) raised the one-day repurchase rate by 25 basis points from 2.00% to 2.25%. The decision, which was broadly in line with private sector analysts' expectations, followed on a 25 basis-point increase in December. Monetary authorities claimed that the recovery in the global economy continues and thus inflationary pressures will increase on the back of strong economic growth. The Central Bank furthermore stated that risks to global economic growth have declined, with economic growth in the United States likely to exceed the 2010 result while robust growth in exports and private consumption in core Europe should mitigate negative effects related to the persistent sovereign debt risks. Finally, Asian economies are expected to expand robustly, on the back of rising exports and domestic demand. The BoT Assistant Governor, Paiboon Kittisrikangwan, argued that the Thai economy improved in the final quarter of 2010, amid strong growth in both domestic and external demand. Accordingly, monetary officials expect that the economy will maintain its strong momentum in 2011. Stronger domestic demand will cause inflationary pressures, while supply side pressures will also exist, as a result of the upward trend in oil and commodity prices. The next monetary policy meeting is scheduled for 12 February.
Author: Ricardo Aceves, Senior Economist