Thai Central Bank plays economy impact over inflation

Tarisa

The comments will reinforce market expectations of an interest rate hike in the near future but Tarisa ruled out calling an early meeting of the Monetary Policy Committee.

The next meeting is scheduled on July 16.

Any increase in the policy interest rate is unlikely to have a significant impact on spending or economic growth, Tarisa told reporters in a press conference.

 "Our real interest rate is negative, therefore if there is any hike in the policy interest rate, any affect on spending and economic growth won't be much," said Tarisa.

Central bank said last week the said inflation could reach a double-digit level this year, creating worries among market participants that the bank would announce a surprise inter-meeting rate increase.

Inflation hit a decade high of 7.6% in May as record oil prices fed broad-based price increases.

Thailand's benchmark interest rate has been unchanged at a growth-accommodative 3.25% since August last year to support an economy battered by the political troubles that culminated in the ouster of Thaksin Shinawatra as prime minister in a September 2006 coup.

The governor downplayed the chances of double-digit inflation this year. "It is possible that inflation may hit double digits in certain months but the chance is rather slim," she said.

Membership of the MPC will change by the end of August as part of the committee's regular renewal and the new MPC will look at whether the central bank should target headline inflation and whether to change the inflation target, Tarisa said.