BOT wary of inflation : Paiboon

At the current level of the policy rate, there is no sign of any problem regarding stability, and inflation is manageable, said Paiboon Kittisrikangwan, assistant governor and MPC secretary.
The current real interest rate is relatively low at about minus 0.3 per cent.
However, inflation risk exists because of the country’s faster-than-expected economic recovery in the first quarter of the year, Paiboon said.
There is upward inflationary pressure due to a strong pickup in domestic demand, higher fuel prices and an increase in the minimum wage in key provinces.
“These could cause greater pass-through of higher costs to the prices of goods and services,” Paiboon said.
As the euro-zone economy has entered recession and it will take time for its structural problems to be resolved, external factors also continue to pose a major risk to Thailand’s economic growth, he said.
Given the country’s faster-than-expected broad-based recovery in manufacturing, consumption and investment, “we expect they will remain the economic drivers in the second half”, Paiboon said.
A revision of the BOT’s economic forecast is expected to be announced on May 11. “The estimated economic figures may be adjusted because of the quicker-than-anticipated recovery in the first quarter,” Paiboon said.