Thai central bank: Inflation in 2nd half of 2012 likely to drop

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BANGKOK, July 3 – Inflation in the second half of this year is likely to drop thanks to a global economic slowdown, as well as falling goods and energy prices, said Bank of Thailand (BoT) Governor Prasarn Trairatvorakul.

As a result, the BoT reduced its estimate for average inflation to 3.3 per cent from 3.5 per cent.

The governor said the next meeting of the monetary policy committee on July 25 will discuss the euro zone debt crisis and the US economy as key factors influencing the bank’s decision on its interest rate policy.  Related factors must also be considered thoroughly, he said.

The central bank governor reaffirmed, however, that the current policy interest rate at three per cent helps stimulate the economy and is appropriate with current inflation. Thailand’s inflation is closely similar to others in the region, said Mr Prasarn.

The BoT chief pledged that the central bank will keep inflation at bay to ensure that Thailand will not lose its edge in terms of cost competitiveness.

He conceded that capital inflows and outflows are volatile and said that the BoT is closely monitoring them.

Mr Prasarn said he was confident that this year, Thailand will record a greater foreign capital inflow than outflow.