Central Bank concerned over upward trend in inflation

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BANGKOK, June 3 – Inflation tends to rise and may surpass three per cent in the third and fourth quarters this year, Amporn Saengmanee, director of the central bank’s Monetary Policy said on Friday. 

As economic growth continues upward, it can cause expectations of inflation shock, particularly for food or consumer goods. However, if crude oil price in the global market stays around US$100 per barrel, it is believed that inflation will drop for the first quarter of 2011, Mr Amporn said. Speaking about a political party policy during the election campaign to push economic growth to eight percent, he said if the Thai economy has potential capability to expand by that much, it should not cause high inflation.

However, the Thai economy currently has potential to grow by 4.5 per cent. If economic acceleration exceeds its capacity, that will lead to an inflationary problem.

If the economy accelerates beyond its potential, inflationary pressure will rise. As a result, implementation of monetary policies should take into account that inflation expectations should not be too high, Mr Amporn said.

However, the Bank of Thailand’s decision to raise policy interest rate several times is adjusting the real interest rate, which was negative, to a normal rate that should support economic growth and stabilisation. (MCOT online news)