Thailand's Central Bank Is Excessively Cautious

Fri, 05/04/2012 - 22:53 EDT - Seeking Alpha

By Emerging Money:By Sean Geary

Thailand’s central bank opted not to change interest rates this week, in spite of prodding from the government to reduce borrowing costs. Thai Finance Minister Kittiratt Na-Ranong had previously encouraged the central bank to reduce rates in order to catalyze business expenditure in the wake of last year’s devastating floods. However, the central bank opted not to reduce its benchmark rate over potential inflation concerns, even though April’s inflation numbers came in at a two-year low. Because Thailand is a net importer of fuel, persistently high crude prices can stoke inflation. As well, rising wages in Bangkok and other provinces could also increase inflationary pressures. A more pressing concern for the Thai economy going forward is a decrease in external demand. Thailand is heavily reliant on exports to drive its economy, which account for more than two-thirds of GDP. In March exports decreased for the fourth timeComplete Story »

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Thailand's Central Bank Is Excessively Cautious

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