Thailand: Interest Rates Rise

October 2004
Asia Monitor: South East Asia Monitor Volume 1;Oct2004, Vol. 15 Issue 10, p1
Country Report
Country Report
This article focuses on the rise in interest rates in Thailand. Core inflation in Thailand remains well within the central bank's 0-3.5% range. The decision to raise rates appears to be because of growing concern that, with headline inflation increasing, the current focus on core inflation may risk allowing headline inflation to feed through into higher wages and so create an inflationary spiral. One of the main factors behind the recent increase in inflation in Thailand has been higher oil prices, with the OPEC basket on August 23 reaching an all-time high (in nominal terms). An appreciation of the Thai baht against the U.S. dollar would reduce the price of oil in baht terms, and therefore reduce inflationary pressures in the economy.


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