Thai Economy Probably Kept Fastest Growth in 2 Years
Thailand's economy probably maintained the fastest pace of growth in two years in the first quarter, central bank Governor Tarisa Watanagase said.
The Bank of Thailand will aim to “prevent inflation from damping economic recovery and derailing investment,'' Tarisa said at a seminar in Bangkok today.
Thailand's government is increasing spending and cutting taxes as it seeks to expand the economy by 6 percent this year. Rising commodity prices may prompt the Bank of Thailand and other regional central banks to raise interest rates, according to JPMorgan Chase & Co.
The economy probably expanded by “close'' to 6 percent in the first quarter, Tarisa said today. That would follow a 5.7 percent pace in the previous three months and would be the fastest quarterly rate since the first quarter of 2006.
Government spending and tax cuts are helping “stimulate economic growth,'' Tarisa said. “That leaves more room for monetary policy to take care of price stability,'' she said, adding that policy is “accommodative.''
Rising Prices
Thailand's central bank has kept its one-day bond repurchase rate at 3.25 percent since August credit reports. Inflation accelerated at the fastest pace in two years in April, fanned by record commodity and oil prices. The monetary policy committee meets on May 21 to decide on interest rates.
The Bank of Thailand uses core inflation, which excludes food and fuel costs, to target monetary policy. Core prices rose 2.1 percent last month, the fastest pace since June 2006. That's still within the 1.5 percent to 2.5 percent range the central bank is forecasting this year.
Policy makers will boost borrowing costs to 3.5 percent next quarter, and by another 25 basis points by the end of 2008, JPMorgan economist Sin Beng Ong wrote in report published on April 25.
The government is scheduled to report first-quarter economic growth on May 26.
Filed under: business by Wolf