US Fed expected to maintain inerest rate at upcoming meeting

BANGKOK, June 21 (TNA) - The US Federal Reserve is expected to maintain its current interest rate at 2 per cent until the third quarter this year due to the persisting weak US economy and poor performances by financial institutions, and core inflation has not climbed much, according to a report issued by Thailand's Kasikorn Research Center.

The report said the Fed's Monetary Policy Committee is scheduled to meet
Tuesday and Wednesday to
discuss its interest rate, ande there are signs that it will maintain the
existing rate until at least the next quarter.

Although the Fed has expressed concern over the current US inflation, it
is hoped that it would not adjust the Fed fund rate -- at least in the
foreseeable future -- as it would try to control inflation from
accelerating which could erode consumer confidence and economic recovery,
the report said.

It said the Fed's attempts to control US inflation might help the dollar
to regain its strength gradually against the Thai currency, the baht.

By late Friday, the baht stood at Bt33.41 against the dollar on the
onshore market compared to Bt33.40 on Thursday.

The steady decline in Thailand's current account surplus due to
high-priced oil imports, plus the volatility of the dollar and domestic
political turbulence may depress the baht in the near term, the report
said.

Taking these factors into account, the Bank of Thailand's Monetary Policy
Committee may have to raise its short-term rates, now set at 3.25 per
cent, when it meets on July 16 because of rising inflation, it added.
(TNA)