Momentum steady, inflation within forecast

ECONOMY / CENTRAL BANK VIEW

Momentum steady, inflation within forecast

POST REPORTERS

The Bank of Thailand insists that growth momentum remains steady, with the economy projected to grow by 4.3% to 4.8% this year.

Amara Sriphayak, a senior director for the central bank's Domestic Economy Department, said there were no signals that growth this year was set to collapse.

''Everyone has the right to an opinion. But based on our macroeconomic data, we see no signs that could cause growth to fall below current projections,'' she said yesterday.

Inflation similarly remained within the central bank's latest estimates made in October. Inflation, measured by the consumer price index, ranges from 1.8% to 2.3% and core inflation, which excludes energy and food prices, at 0.8% to 1.3%.

Dr Amara said the central bank could revise upwards its inflation forecasts given the rise in global oil prices.

But she insisted that the central bank was not planning to immediately change the current inflation range used by the Monetary Policy Committee.

Earlier reports suggested that the MPC, which sets interest rates with the goal of maintaining core inflation within a range of zero to 3.5% over the next eight quarters, was considering increasing the upper end of the target range to 4.5%. The next MPC meeting is scheduled for Jan 16.

''We are still gathering information for review by the MPC, and cannot say whether the inflation-targeting framework will shift to general inflation or continue to use core inflation as at present,'' Dr Amara said.

''In any case, we do not see inflation increasing to the extent that it would undermine economic growth this year.''

The Commerce Ministry earlier this week announced that headline inflation in 2007 averaged 2.3%, down from 4.7% the previous year.

December consumer prices rose 3.2% year-on-year, the highest in 12 months, but increased just 0.1% from the previous month.

Dr Amara noted that Thai exports continued to grow strongly despite the slowdown in the US economy, indicating the ability of Thai firms to expand to other markets.