BOT Raises Interest Rate to Curb Inflation

[george]

BOT raises interest rate to curb inflation

BANGKOK: -- Thailand's central bank on Wednesday raised its benchmark interest rate for the first time in two years, hiking it 0.25 per cent to 3.5 per cent in an effort to curb inflation.

Duangmanee Vongpradhip, assistant governor of the Bank of Thailand's monetary policy division, said the hike to the bank's one-day bond repurchase rate was deemed necessary to keep inflation from getting out of control.

"The risks to inflation have risen markedly, which would affect private sector confidence, make it increasingly difficult to ensure economic stability going forward, and impact potential growth as well as the competitiveness of the Thai economy in the long run," Duangmanee said.

-- DPA 2008-07-16

[george]

MONETARY POLICY

BOT ups rate to cool rampant inflation

Savings now running at minus 6.6%, bank says

BANGKOK: -- The policy rate was hiked by 0.25 percentage points yesterday to 3.5 per cent as the Bank of Thailand fought to protect depositors from the squeeze of rising inflation and a minus 6.6 per cent return on their savings.

Based on the 12-month fixed-deposit rate and lending rates quoted by commercial banks, both deposit and loan rates have plunged deeper into negative territory due to higher inflation, which jumped to 8.9 per cent last month.

"Rising inflation has affected the behaviour of savers, so we needed to raise the rate to manage inflation expectations," said Duangmanee Vongpradhip, the BOT's assistant governor.

Given that deposit rates are now as much as minus 6.6 per cent in real terms, consumers are looking to shift their savings into other channels that offer higher returns - such as property and commodities.

This could contribute to another real-estate bubble and relentless increases in commodity prices, according to the central bank.

She said the Monetary Policy Committee (MPC) had also decided to lift the rate to manage the upside risk to inflation, which could otherwise affect business confidence.

Moreover, a rate hike could help sustain the country's competitiveness, which could be worsened by higher inflation as far as exports are concerned.

Inflation has been driven by rising food and oil prices, with the annual oil-price assumption now adjusted to US$135 (Bt4,515) per barrel in the base-case scenario and to $176 in the worst case.

Yesterday's 25-basis-points hike is not excessive, as the MPC did not want to affect economic growth, which has already been negatively affected by low consumer confidence and global economic uncertainty.

Duangmanee said political uncertainty had eroded confidence and growth projections were now in the range of 4.75 to 6 per cent this year.

She said the government's latest economic package would help relieve the financial burden on low-income consumers. She warned that a cut in excise tax on oil was not suitable since oil usage would not be discouraged by such a move.

Meanwhile, former finance minister Virabongsa Ramang-kura predicted that the economy would be bearish due to high inflation and high oil prices for the next six to seven years.

Chaiwat Utaiwan, president of Siam City Bank, said a higher rate would not affect non-performing loans in the short term.

"Right now, the oil price is steadily on an upward trend. A rate hike is like a warning signal for all concerned," he said.

Federation of Thai Industries chairman Santi Vilassakdanont said small business operators, who have started to suffer liquidity problems, would be affected by the rate hike. At present, some provincial operators have to pay for materials in cash and are finding it more difficult to tap loans.

Siam Cement Group chief Kan Trakulhoon acknowledged that higher interest rates would further push up operating costs. The group has recently upped its oil-price projection from $130 a barrel to $150, on anticipation that economic growth this year would fall behind the forecast.

-- The Nation 2008-07-16

[george]

More bank rate hikes expected for Thailand

More rate hikes likely to combat inflation

0.25-point increase first in 13 months

BANGKOK: -- The Bank of Thailand raised short-term interest rates yesterday by a quarter-point in a widely expected move, and warned that further hikes are possible to help clamp down on inflation.

The move by the central bank's Monetary Policy Committee (MPC) raises the one-day repurchase rate to 3.5%. It was the first increase since June 2007.

''The MPC deemed that the risks to inflation have risen markedly, which would [... more]

-- Bangkok Post 2008-07-17

[marquess]

More bank rate hikes expected for Thailand

More rate hikes likely to combat inflation

0.25-point increase first in 13 months

BANGKOK: -- The Bank of Thailand raised short-term interest rates yesterday by a quarter-point in a widely expected move, and warned that further hikes are possible to help clamp down on inflation.

The move by the central bank's Monetary Policy Committee (MPC) raises the one-day repurchase rate to 3.5%. It was the first increase since June 2007.

''The MPC deemed that the risks to inflation have risen markedly, which would [... more]

-- Bangkok Post 2008-07-17

Interesting that people are keeping quiet about oil prices now, I calculate that the price oil has come down by about 30% but at the pumps Benzine 91 has only come down by 10%. What has happened to the other 20%. It seems that what goes up, keeps going up and just doesn't come down!

[VBF]

Interesting that people are keeping quiet about oil prices now, I calculate that the price oil has come down by about 30% but at the pumps Benzine 91 has only come down by 10%. What has happened to the other 20%. It seems that what goes up, keeps going up and just doesn't come down!

Regrettably the same is happening in the UK - pump prices have stayed high despite the oil price drop.

Of course the oil "majors" are basically the same companies where ever you are!

[marquess]

!

Regrettably the same is happening in the UK - pump prices have stayed high despite the oil price drop.

Of course the oil "majors" are basically the same companies where ever you are!

Thieves! They can never have enough money nor make enough money.

[marquess]

Here below is a link to an article in todays Telegraph, highlighting what the disparity in world market prices and those at the pumps, at least they have some writing about it and a consumer watch dog, no chance of that here.

http://www.telegraph.co.uk/motoring/main.j...0/mnfuel110.xml