MPC member guarantees no rate hike
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At the meeting on September 5, the Monetary Policy Committee would do anything but hike the policy rate.
That was the message delivered by Narongchai Akrasanee, an economic guru who now serves as a member of the Bank of Thailand's committee, which oversees Thailand's policy rate.
When asked at Thailand Focus 2012 today whether a rate cut is possible in light of intensifying euro-zone crisis, Narongchai said "“I can assure you that there will be no rate hike."
He said economic downside risk is now greater than inflation threat.
The euro-zone economy is expected to contract this year while it will take some time before leaders come up with permanent solutions to deal with the massive public debts.
Yesterday, European Central Bank head Mario Draghi urged skeptical Germans Wednesday to support his efforts to rescue the euro, arguing that ``exceptional measures'' could be used to restore stability across the 17-country single currency group. The ECB is hard at work on eagerly awaited plans for a bond-buying program aimed at lowering the borrowing costs of debt-ridden governments, including Spain and Italy. Draghi is expected to say more about the plans at the next ECB rate-setting meeting on Sept. 6.
Associated Press reported that the plans have sparked a fierce debate in Germany, which is the biggest backer of Europe's financial rescue efforts. The country's national central bank, the Bundesbank, and its head, Jens Weidmann, is against the bond-buying idea, along with many academic economists, conservative politicians and voters. They argue that it puts taxpayer money at risk and breaks the European Union treaty provision barring the ECB from directly backing governments.
Chancellor Angela Merkel has indicated she's open to the ECB's plans and has publicly admonished members of her governing coalition to tone down angry remarks about debt-stricken countries such as Greece. A top German official on the ECB executive board, Joerg Asmussen, has also publicly backed the bond purchase plans.
