How long can Thailand’s central bank swim against the tide?

[Will B Good]

21 hours ago, Walker88 said:

There is precious little understanding of economics evidenced in this forum.

 

Inflation is not instantaneous. It builds up over time, and then gets juiced by marginal issues. It's like a dam where one ignores the cracks and leaks until the thing bursts.

 

After the crisis that began under Bush II, the Fed embarked on ZIRP. That set the ball rolling in the wild speculation that brought back the housing market and made credit easy. Under 45 the National Debt exploded by $7,000,000,000,000, some of it due to spendthrift policies and a large part due to the tax cut. That is what really got inflation in motion. In my analogy the dam cracked and the leaks began. Bad luck whoever is in power when it inevitably bursts, because they will get the blame.)

 

Then came Covid and all of the aid handed out. Then as Covid came to an end all the pent up demand for everything from driving to travel to clothes juiced prices further. The fact much of the world relied on parts from China, at a time when China was locking down (disrupting supply chains) is another factor. The russian invasion of Ukraine exacerbated things further by driving up fossil fuel prices (risk premium), with help from wasteful  crypto mining, at a time when people around the world were driving back to work. Toss in the fact that roughly 18% of the world's wheat crop is no longer coming to market, and all of that combined to bring about worldwide inflation.

 

It will get worse in nations whose currency is tumbling vs the dollar, because this is one of the few times when oil and the dollar rise together. The US will be spared some of that because oil is priced in dollars, but Thailand, Japan, the EU---really everywhere except the US and Middle East---is going to feel price inflation due to higher fuel and transport costs.

 

It is patently silly to blame Biden for all of this, though in the US, the repubs certainly are trying to do that. Blame the Fed for keeping its ZIRP for far too long, blame 45 for his profligacy, blame putin for invading a sovereign peaceful nation, blame Covid for postponing demand then unleashing it, and blame Covid/China again for their lockdowns and the resulting supply chain disruptions.

Thank God (or Bunter) for Brexit

 

In the UK we still have a massive Brexit bonus to come.......that should save us.

[Excel]

7 minutes ago, Will B Good said:

Thank God (or Bunter) for Brexit

 

In the UK we still have a massive Brexit bonus to come.......that should save us.

Is that like a Brucie bonus ?

[GroveHillWanderer]

37 minutes ago, ThailandRyan said:

It's for my Audi Q5 I picked up from my ex who could not afford to pay for it anymore......

According to audiworld.com you could use either 91 or 95 but the premium grade is preferable in both cases:

 

Quote

When it comes to octane grades, Audi is pretty clear and straightforward about the preferred choice: Premium grade fuel (91 and up).

Audi Q5 gasoline recommendations

 

[Eric Loh]

Delicate dance for BOT. The inflation spike is not due to demand and wage increase but surge in energy costs. Raising rate will be disastrous for most Thais with debts. It will snowball to massive bad loan situation which will badly affect financial institutions. It will also create a drop in demand for housing, cars, household appliances etc and certainly can lead to a recession. IMO the energy price surge is shock reaction to Russia oil & gas sanctions. The west will rally and probably find other sources of oil supply and sanctions against Iran and Venezuela likely lifted. I think targeted fiscal policies rather than rate hike will be better to deal with the current economic situation. 
 

Reversely the interest rate differential with US is causing massive outflow of capital from Thailand to US and causing the Baht to weakened and caused imported inflation. However the return of tourists back to Thailand will creat a demand for Baht. The economy is also improving and likely return to a current surplus which will strengthened the Baht. 
 

A delicate position for BOT to ponder.