Bot Likely To Raise 14-day Repo By 0.25%

BOT likely to raise 14-day repo by 0.25%

BANGKOK: -- The Bank of Thailand (BOT)'s Monetary Policy Committee (MPC) is likely to raise the 14-day repurchase rate (repo) by 25 basis point to 1.75% from 1.50% at its meeting today, according to the KASIKORN Research Center (KRC).

The leading think tank said the repo is to be adjusted upward in compliance with the implementation of the monetary policy by taking into account the inflation rate movement.

It projected that the local inflationary pressure would stay high in the rest of the year.

Also, the government is expected to raise the diesel price cap, or allow the price to float in the first half of next year.

Currently, he said the liquidity in the banking system remains excessive, and could be used to accommodate the economic activities in the remaining period of this year.

Under the circumstance, KRC said, major commercial banks need not immediately raise key rates (saving and fixed three-month deposit rates) in tandem with the expected repo hike by the central bank.

The repo increase will have a limited effect on the private spending and the country's economic expansion since the direction of actual interest rates remain in a negative territory and interest burdens incurred by people are still unchanged.

KRC viewed that the expected rise in the 14-day repo would contribute to the balance of the net capital flow and baht value.

--TNA 2004-10-20