June 17, 2008
BANGKOK - The Central Bank Governor hinted Monday at an eventual interest rate hike, as she sought to reassure investors after warnings that inflation could hit double digits this year.
Bank of Thailand governor Tarisa Watanagase downplayed her statement last week that increased consumer spending could bring double-digit inflation.
"I do not want us to presume that inflation will rise up to double digits. Such presumptions will lead to more spending and cost adjusting as well as making foreign investors panic," she told reporters.
But she added: "Double-digit inflation may happen at some point in time if oil prices rise."
Inflation hit a 10-year high of 7.6 percent in May as soaring fuel prices pushed up costs in food and other sectors, sparking speculation that the Central Bank could raise its key interest rate, possibly before its next monetary policy meeting in July.
The bank has kept interest rates steady at 3.25 percent since August last year, aiming to slow the strengthening baht, according to AFP.
Tarisa said that rate was still one of the lowest in the region.
"If there is going to be an increase in the interest rate, that will not really affect spending or economic growth," Tarisa said.
She said the decision whether to adjust the rate would be made by the central bank's Monetary Policy Committee during its regularly scheduled meeting on July 16.
