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Bank of Thailand bonds accounted for 88.18 per cent of trading value, while government bonds represented 7.27 per cent.

The BOT is still concerned with inflationary pressures after market data in April, released by the National Economic and Social Development Board (NESDB), showed gross domestic product grew 6 per cent year on year in the first quarter, compared with 5.7 per cent in the previous quarter.

The Consumer Price Index in May rose above 6 per cent as a result of higher energy prices and a shaky political situation, adding risks for investment and driving the yield curve up dramatically from the previous month.

Short-term bonds (under three years) yield rose between 15 to 35 basis points, while medium-term bonds (three to 10 years) shifted up 33 to 50bps. Long-term bonds (more than 10 years) moved up 40 to 50bps.

Notably, the benchmark bond yield - LB133A - rose to 4.46 per cent from 4.06 per cent and LB183B last executed at 5.25 per cent, up from 4.74 per cent since the beginning of May.

The Monetary Policy Committee, meeting on May 21, decided to keep its policy rate unchanged as widely expected at 3.25 per cent (the seventh consecutive time that the rate has been unchanged since August 2007).

The BOT's statement noted "risks to inflation increased markedly from the previous meeting. Headline inflation accelerated as a result of the significant increase in energy and raw food prices.

Meanwhile, core inflation rose by more than expected, mainly as a result of higher pass-through of production costs, which could result in higher core inflation going forward".

Similarly, the European Central Bank made the decision to hold its policy rate at 4 per cent, as expected. The bank continued to be worried about inflationary pressure that might threaten overall economic growth in the long term.

The US Fed Fund Rate is likely to be kept at the current level (2 per cent) in the near term, as futures markets predicted the Fed would no longer cut its target rate - at least over the next two quarters.

The recent moves by central banks reflect considerable concerns over rising inflation globally.

In Thailand, inflation figures for April released by the Commerce Ministry showed stunning outcomes, with headline inflation up 6.2 per cent from 5.3 per cent in the previous month.

Core inflation rose to 2.1 per cent from 1.7 per cent in the previous month.

Some economists anticipate that the BOT will implement more intense measures to maintain its core target rate in the range of 0-3.5 per cent.

Last week, the NESDB revised its inflation projection up from 3.2-3.7 per cent to 5.3-5.8 per cent, confirming that local inflationary pressures were rising.

Thailand's GDP growth figure for the first quarter has been released, improving the positive sentiment for the economic environment with 6-per-cent growth year on year, compared with 5.7-per-cent expansion in the previous quarter.