BOT raises policy interest rate by 0.25%

BANGKOK: -- The Bank of Thailand’s Monetary Policy Committee has decided to raise a policy interest rate by 25 basis points to curb inflation rates and help push up actual interest rates into a positive territory.

BOT’s Deputy Governor Atchana Waquamdee said MPC resolved at its meeting on Wednesday to increase the 14-day repurchase rate to 4.25 per cent from 4 per cent per annum with an immediate effect.

MPC viewed the economy this year would continue to grow, boosted by improved exports and private investment.

The inflationary pressure still persisted with the general inflation rate easing to 5.8 per cent in December from 5.9 per cent in November while the core inflation rate rising to 2.6 per cent from 2.4 per cent.

The BOT believed the core inflation rate would not increase more than targeted this year at 0-3.5 per cent, but projected it would exceed the target next year.

Mrs Atchana said MPC saw it necessary to further increase the policy interest rate to turn the negative actual interest rates into positive ones.

It estimated the actual interest rates would turn positive in the first half of this year due to the easing of inflation rates.

At present, a fixed deposit rate offered by commercial banks remains minus 1.17 per cent given the current inflation rate.

With the continued easing of liquidity excess in the banking system, the central bank projected, commercial banks would raise interest rates at a higher level than the policy interest rate.

--TNA 2006-01-19

2 STATE BANKS HAVE ANNOUNCED RAISING THEIR INTERESTS AFTER CENTRAL BANK'S 0.25% HIKE ON WEDNESDAY

2 state banks have announced raises in their interest rates, after the Bank of Thailand's announcement of a quarter-point increase on Wednesday.

Government Housing Bank Managing Director Khan Prachuabmoa (ขรรค์ ประจวบเหมาะ) said the bank needed to increase interests due to higher costs. He expects the 3-year fixed interest loan's 0.25% rise to take place in February. However the bank would maintain its 5-year and 10-year fixed interests as it wanted clients to turn to longer term interest rates.

In the meantime the Government Savings Bank has raised its long-term fixed deposit interests in order to maintain its major clients. 6-month and 12-month fixed deposit account holders will have their interest rates raised by 0.5% starting today. The bank also raised its minimum loan interest by 0.25%, resulting in its MLR interest having been increased to 6.75% and MOR interest at 7%.

The new loan interest rates will take effect this coming Monday.

Source: Thai National News Bureau Public Relations Department - 20 January 2006