60 Minutes blasted after replacing harris word salad…

[webfact]

EDITORIAL

BOT is likely to continue to raise interest rates

By The Nation

The central bank will try to spur economic growth and keep inflation under control as the election looms amid rising consumer prices

The Bank of Thailand on Wednesday raised its policy interest rate by 25 basis points to 3.00 per cent. This was generally in line with the market consensus. It also marked the fifth consecutive 25-basis-point rate hike by the central bank since December. Indications are clear that the central bank is following a gradual path to normalising interest rates as it attempts a balancing act between maintaining moderate economic growth and curbing inflation.

The Monetary Policy Committee, according to its official statement, still holds positive views on global economic growth. However, it also expresses reservations on the possible drag on US consumption, the debt crisis in Europe and the lingering impact of the recent disasters in Japan.

Turning back to Thailand, the MPC believes that the economic fundamentals remain strong. Income growth and exports will continue to play an important role in propelling the Thai economy in the second half of the year. But the bad news is that prices are still rising sharply.

The Commerce Ministry has reported that core inflation (minus food and energy) rose to 2.48 per cent in May, compared with 2.07 per cent in April. Achana Waiquamdee, the deputy governor of the central bank, earlier warned that core inflation might breach the central bank's target of 0.5 to 3.0 per cent by September.

At the same time, headline inflation (food and energy included in the basket of price indices) also rose to 4.04 per cent in April and to 4.19 per cent in May. This has raised worries over the higher cost of living, as oil prices are also on an upward trend.

With the general election looming, the higher cost of living has become a major campaign issue. Most of the political parties have offered a variety of remedies to help increase the incomes of working Thais - from mega-project infrastructure investments to drive growth, to a rise in minimum wages to increase people's purchasing power.

The Democrat government so far has carried out a massive stimulus spending package - both on and off balance sheets - to help drive economic growth. All of these factors have played their part in creating conditions for prices to rise even higher.

With interest rates remaining on the uptrend, the question is how fast or effectively the Bank of Thailand will act on the inflation expectations. The central bank continues to show a hawkish stance.

The financial markets expect that when the MPC meets again on July 13, it will raise the policy rate again to 3.25 per cent. This will at least bring the rate to a neutral stance in the face of the inflation rate, as Thai interest rates still offer negative yields. And with the trend to higher prices, the MPC will have some catch-up work to do.

Earlier most analysts believed that the central bank would pause its cycle of interest-rate hikes this year at 3.25 or 3.50 per cent. Now it appears that there is a larger possibility that the policy rate will have to go even higher to curb inflation.

-- The Nation 2011-06-03

[khaowong1]

Not being a economic major, I had to do a little reading about raising interest rates to curb inflation. Here's what I just read.

The theory is that a rise in interest rates, and the corresponding limitation in money supply, will "damp down" excess demand and "take the pressure out of market". The intention is to reduce households' and firms' willingness to buy goods and services through making credit more expensive, ie; curbing inflation.

There is something fundamentally unsatisfactory about this process and the theory behind it. In the current inflationary situation in the US and the UK, price increases were initiated by external factors such as petroleum supply and the failure of banks in USA. Therefore, inflation in UK is not caused by excess demand but by increased input costs. Therefore, monetary policy alone cannot be expected to control the economy. In fact, a rise in interest rates adds to inflation through raising the costs of manufacture, housing, transport and vehicles and so on.

I'm sure there is some disagreement about using interest rates to curb inflation. Like I said, I'm no expert.

[anterian]

Not being a economic major, I had to do a little reading about raising interest rates to curb inflation. Here's what I just read.

The theory is that a rise in interest rates, and the corresponding limitation in money supply, will "damp down" excess demand and "take the pressure out of market". The intention is to reduce households' and firms' willingness to buy goods and services through making credit more expensive, ie; curbing inflation.

There is something fundamentally unsatisfactory about this process and the theory behind it. In the current inflationary situation in the US and the UK, price increases were initiated by external factors such as petroleum supply and the failure of banks in USA. Therefore, inflation in UK is not caused by excess demand but by increased input costs. Therefore, monetary policy alone cannot be expected to control the economy. In fact, a rise in interest rates adds to inflation through raising the costs of manufacture, housing, transport and vehicles and so on.

I'm sure there is some disagreement about using interest rates to curb inflation. Like I said, I'm no expert.

As far as I can see, if you are a worker or manufacturer, higher interest rates hurt. If you are a retiree, with deposits in a bank, then higher rates benefit you.

[toffo9]

Not being a economic major, I had to do a little reading about raising interest rates to curb inflation. Here's what I just read.

The theory is that a rise in interest rates, and the corresponding limitation in money supply, will "damp down" excess demand and "take the pressure out of market". The intention is to reduce households' and firms' willingness to buy goods and services through making credit more expensive, ie; curbing inflation.

There is something fundamentally unsatisfactory about this process and the theory behind it. In the current inflationary situation in the US and the UK, price increases were initiated by external factors such as petroleum supply and the failure of banks in USA. Therefore, inflation in UK is not caused by excess demand but by increased input costs. Therefore, monetary policy alone cannot be expected to control the economy. In fact, a rise in interest rates adds to inflation through raising the costs of manufacture, housing, transport and vehicles and so on.

I'm sure there is some disagreement about using interest rates to curb inflation. Like I said, I'm no expert.

your 100 percent correct... raising interest rates does not effect inflation its oil and food prices that does.. Atlast someone talking sense on here

[swerver]

Not being a economic major, I had to do a little reading about raising interest rates to curb inflation. Here's what I just read.

The theory is that a rise in interest rates, and the corresponding limitation in money supply, will "damp down" excess demand and "take the pressure out of market". The intention is to reduce households' and firms' willingness to buy goods and services through making credit more expensive, ie; curbing inflation.

There is something fundamentally unsatisfactory about this process and the theory behind it. In the current inflationary situation in the US and the UK, price increases were initiated by external factors such as petroleum supply and the failure of banks in USA. Therefore, inflation in UK is not caused by excess demand but by increased input costs. Therefore, monetary policy alone cannot be expected to control the economy. In fact, a rise in interest rates adds to inflation through raising the costs of manufacture, housing, transport and vehicles and so on.

I'm sure there is some disagreement about using interest rates to curb inflation. Like I said, I'm no expert.

Don’t feel like the Lone Ranger,

Consistent with the increases in the price of motor vehicle fuel the number of vehicles on the road in Thailand also increases, in addition to the fuel price increases also is the reckless driving increases by trying to push the accelerator pedal through the floorboard.

Thais I’m familiar with contemplating buying a motor vehicle I sit down with them explaining buying is only the first thing after which comes the maintenance of the vehicle. Nothing seems to make an impression, they go right ahead, round up the down payment among relatives and acquaintance and next they are driving around proud as a dog having seven pricks. Of course it is not long in coming when I hear that to fill the tank with fuel takes half week’s wages. Do they slowdown in driving speed? You must be dreaming 150-KPH in their newly acquired SUV on the 120-KPH Motorway is the norm. Well half year later, either the vehicle has been offloaded on another fool, or it has been repossessed by the Finance Co. At Big C South Pattaya parking lot a couple days each month the area Finance Companies auction off the reposed vehicles, each and every month you can count never less than a hundred vehicles sitting in the lot to be auctioned off.

Its not only the motor vehicle question, there is also the seemingly unstoppable building of 30 and more stories Human Warehouses for sale. I.e. Driving down On Nut in BKK a few years ago some outfit build a human warehouse on On Nut. Well monkey see monkey do, today there are about a dozen of the human warehouses under contraction and nearing completion on On Nut and that is only one street, there are lots more street were this mania is underway, and not only BKK, but Pattaya is no different.

Next question coming down the Pike, were are all these people moving down from upcountry filling these human warehouses in BKK going to work. Industry over the past several years has been moving out of BKK, how many more beer bars with prostitutes can BKK put on display for farang tourists?

Better don’t loose any sleep over it, because Thais do as they want and to hell with all the explaining of the farang who doesn’t know anything, that’s why he is living in Thailand.

[midas]

Don’t feel like the Lone Ranger,

Consistent with the increases in the price of motor vehicle fuel the number of vehicles on the road in Thailand also increases, in addition to the fuel price increases also is the reckless driving increases by trying to push the accelerator pedal through the floorboard.

Thais I’m familiar with contemplating buying a motor vehicle I sit down with them explaining buying is only the first thing after which comes the maintenance of the vehicle. Nothing seems to make an impression, they go right ahead, round up the down payment among relatives and acquaintance and next they are driving around proud as a dog having seven pricks. Of course it is not long in coming when I hear that to fill the tank with fuel takes half week’s wages. Do they slowdown in driving speed? You must be dreaming 150-KPH in their newly acquired SUV on the 120-KPH Motorway is the norm. Well half year later, either the vehicle has been offloaded on another fool, or it has been repossessed by the Finance Co. At Big C South Pattaya parking lot a couple days each month the area Finance Companies auction off the reposed vehicles, each and every month you can count never less than a hundred vehicles sitting in the lot to be auctioned off.

this is what I have found somewhat surprising in that you hear about Americans and Europeans

experiencing " pain at the pump "and yet I never hear about Thais expressing these frustrations

and I would have thought filling up a big SUV or pick up would drain the Thai wallet far quicker

in Thailand than America or Europe?

What will happen when the diesel subsidy money runs out which I understand will happen before August?

http://www.bdo-thaitax.com/bdo/in-the-news/3000

[Hardie]

Increases in food and energy prices do not affect inflation; they ARE inflation. In fact, no one really knows the minutiae of economics, or it wouldn't be a 'free' market, but interest rates are generally raised to cool an over-heated economy and resulting inflation. Oil prices, because of the physical limits and relatively inelastic demand, are probably a statistical anomaly, though high interest rates could pull hot money away from it.

But then, I'm not an expert either. I have noticed that high interest rates generally means strong currency, though, worth remembering.