Thai central bank says raising interest rate won't slow Thai economy

BANGKOK, July 4 (TNA) - Action by the Bank of Thailand (BoT) Monetary
Policy Committee which is scheduled to meet mid-July will not pose any
negative effect on the Thai economy, according to Bandid Nijathaworn, BoT deputy governor.

On Thursday Mr. Bandid told a seminar that the Monetary Policy Committee, scheduled to meet on July 16, must take several factors into consideration
before increasing the policy interest rate which has stood at 3.25 per
cent since July last year.

The current sharp increase in inflation in Thailand is one vital factor,
especially the Consumer Price Index which in June soared 8.9 per cent from
a year ago. It had affected consumer purchasing power, increased
production costs -- which may reduce competitiveness, and the private
sector opted to slow investment, he said.

Even with a policy interest rate increase, the business base and the
country's solid economic foundation are expected to absorb the rise, Mr.
Bandid said.

Meanwhile, Somchai Sajjapong, advisor to the Finance Ministry's Fiscal
Policy Office, said the Office still believes that this year's inflation
would be at 7.2 per cent -- below double-digit figure -- as long as global
oil prices remain below US$200 per barrel.

Mr. Somchai, however, admitted that rising inflation has impacted the
public's income, especially for the aged and pension fund earners, because
real income has contracted by 6.8 per cent while the incomes of salary
earners is up only 2.5 per cent.

Concerned government agencies have been invited to a brainstorming session
aimed at generating more income for people through supplementary jobs,
said Mr. Somchai. It is expected that a solution could be achieved within
the next two weeks. (TNA)