PM Abhisit warns of impact of policy interest rate hike

BANGKOK, Dec 3 – Prime Minister Abhisit Vejjajiva on Thursday warned of impacts from the central bank's policy interest rate hike, saying it could dampen the country’s economic expansion.

Commenting on the decision by the Bank of Thailand (BoT) Monetary Policy Committee to raise the short-term repurchase rate by 25 basis points at its meeting Wednesday, he said it was at the bank’s discretion to do that.

However, he revealed that the issue was raised for discussion at the meeting of economic ministers in which he suggested the interest rate policy be implemented with caution since the economy seemed to be growing at a slower pace.

Under the current circumstances, he thought all parties concerned must help to maintain the country’s economic recovery.

“I want state agencies concerned to monitor impacts, particularly of currency exchange rate volatilities and capital inflows, on the economic growth rate" he said.

The issue is widely discussed because the central bank always affirmed the policy interest movement won’t encourage the capital inflows, but the government previously commented that the bank must implement the policy with caution to ensure it will not affect the economic recovery.

"It depends on the bank’s discretion as it has full authority in this matter,” said the premier. (MCOT online news)

-- TNA 2010-12-03

Higher interest rates fundamentally = a better investment return - more attrictive - due to a good environment ===== Stronger Baht

Amusing Thailand

Spot on their "have a nice day" there seems to be 2 worlds we live in here.

Why are we still talking about "recovery"?

Look at GDP

http://www.bloomberg.com/news/2010-11-30/baht-posts-monthly-drop-on-slowing-gdp-growth-political-risk.html

Southeast Asia’s second-largest economy grew 6.7 percent in three months through September, slowing from an expansion of 9.2 percent in the previous three months, a government report on Nov. 22 showed

and the unemployment figures

http://in.reuters.com/article/idINSGE6050CB20100106

Jan 6 (Reuters) - Unemployment in Thailand stood at 400,000 in December, or 1.1 percent of the working population, down by half from nearly 800,000 last April, or 2.1 percent, the Labour Ministry said on Wednesday.

Presumably the GDP growth figure is annualised, but this all seems very healthy to me, and a small increase in the base rate to prevent "over exuberance" by signalling the central bank is willing to act, is probably quite prudent. The inflation rate is also relatively high and the central bank should act to contain this, although I am unsure that pushing and pulling on the interest rate lever is an effective tool. Possibly the most effective tool is government "propaganda" is setting expectations of the population.

If any European country could exhibit these statistics, then it would be a "full recovery" and "back on track", in fact, way over the most optimistic growth and employment forecasts into the future of any western country.

Growth is only "sustainable" for periods between crashes.

A sustainable economy will be tried eventually.

If any European country could exhibit these statistics, then it would be a "full recovery" and "back on track", in fact, way over the most optimistic growth and employment forecasts into the future of any western country.

isn't it unfair to shatter with hard facts the year long dreams of many Farangs that any time from now the thai economy and the thai currency will crash?

If any European country could exhibit these statistics, then it would be a "full recovery" and "back on track", in fact, way over the most optimistic growth and employment forecasts into the future of any western country.

isn't it unfair to shatter with hard facts the year long dreams of many Farangs that any time from now the thai economy and the thai currency will crash?

I'm loving it at its strength as my credit cards are offshore and thus Thai Baht is buying more of the local currency to pay the cards each month. If the BOT/PM raises interest rates then Baht may just do it again like a purchase on eBay from my iPhone that I was able to get at 22,000 Baht as opposed at the time at 34,000 Baht. But for investment into Thailand outside currencies just simply don't buy as much as they used to so that alone should slow things a bit.