ID :
143404
Fri, 09/24/2010 - 09:36
Auther :
Shortlink :
http://m.oananews.org//node/143404
The shortlink copeid
BoT counters ex-deputy premier’s criticism on not containing baht surge
BANGKOK, Sept 24 – Countering criticisms and suggestions by former deputy prime minister Veerapong Ramangura that the Bank of Thailand (BoT) failed to cope with the baht surge efficiently and should cut the policy interest rate to slow foreign capital inflow, BoT Domestic Economy Department Senior Director Suchart Sakkankosone said the central bank is not in a position to focus on particular aspects of implementing monetary policy.
Mr Suchart said the central bank cannot opt to implement foreign exchange policy and interest rate policies simultaneously because some will particularly benefit and others will ne negatively affected by such actions.
Should the bank let the interest rate fall, entrepreneurs will benefit from lower production costs while depositors, who earn revenue from deposit rates, will be negatively affected.
At the same time, if the bank causes the baht to weaken, exporters will benefit because revenue earned from the baht exchange increases, but importers will incur higher costs.
Given the advantages and disadvantages from the policy implementation, he said, the central bank cannot give priority to a particular aspect of policy implementation.
Regarding Dr Veerapong’s suggestions that the central bank reduce the policy interest rate, Mr Suchart said the bank must oversee economic stability in the long run and must look ahead for implementation of the interest rate policy.
Should the decision on the interest cut be made now, it would not produce an immediate result. Instead, it must take up to eight quarters to see definite results.
At present, the stronger baht is of grave concern, yet the inflation rate remains within the target range this year. However, inflationary pressure is expected to mount next year.
Given these factors, he said, the central bank is not in a position to give weight to a particular matter because the monetary policy implementation must be balanced to ensure that the economy grows in the long run. (MCOT online news)
Mr Suchart said the central bank cannot opt to implement foreign exchange policy and interest rate policies simultaneously because some will particularly benefit and others will ne negatively affected by such actions.
Should the bank let the interest rate fall, entrepreneurs will benefit from lower production costs while depositors, who earn revenue from deposit rates, will be negatively affected.
At the same time, if the bank causes the baht to weaken, exporters will benefit because revenue earned from the baht exchange increases, but importers will incur higher costs.
Given the advantages and disadvantages from the policy implementation, he said, the central bank cannot give priority to a particular aspect of policy implementation.
Regarding Dr Veerapong’s suggestions that the central bank reduce the policy interest rate, Mr Suchart said the bank must oversee economic stability in the long run and must look ahead for implementation of the interest rate policy.
Should the decision on the interest cut be made now, it would not produce an immediate result. Instead, it must take up to eight quarters to see definite results.
At present, the stronger baht is of grave concern, yet the inflation rate remains within the target range this year. However, inflationary pressure is expected to mount next year.
Given these factors, he said, the central bank is not in a position to give weight to a particular matter because the monetary policy implementation must be balanced to ensure that the economy grows in the long run. (MCOT online news)
