Central bank plays down deflation

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BANGKOK, 9 February 2014  The Bank of Thailand (BoT) has speculated that deflation is unlikely in the near future after entrepreneurs showed signs of raising product prices by 3-4% in the next 12 months

BoT Spokesperson Rung Mallikamas said the Thai economy had a slim chance of facing deflation since the increasing costs of production had been passed on to consumers and product prices would likely increase by 3-4% in the next four quarters. Furthermore, many research institutes, including the central bank, had projected that this year’s inflation would stand at 2-3%, Ms Rung said.

The central bank spokesperson expressed confidence that commercial banks would still play an important financial role in propelling the economy despite the ongoing slowdown. The commercial banks’ NPL level slightly increased but the overall NPL ratio was still low at 2% of the total loans. The banks were more careful with their loans while the borrowers were more careful with their spending, she said.