BOT:Thai economy should not be affected by US key rate hike

BANGKOK, December 17 (TNA) - The Bank of Thailand (BOT) says that the national economy should not be seriously affected by a latest key interest rate rise announced by the US Federal Reserve (FED) earlier this week. BOT Governor Veerathai Santiprabhob made the assessment on Thursday, noting that the domestic market had already absorbed analytical news reports for some time that FED should raise its key interest rate, while the US central bank itself had also signaled a plan to raise its key rate; so, the decision on its key rate increase by a quarter percentage point on December 15 was not a surprise. Dr. Veerathai acknowledged that it remains unclear whether the latest US key rate hike would affect capital transfers from Thailand, but it could affect forex and bond interest rates with its impacts to be more obvious in emerging economies, rather than Thailand. Meanwhile, Deputy Prime Minister Somkid Jatusripitak, who oversees economic affairs, also foresaw that the Thai economy should not be seriously affected by the latest US key rate hike, as concerned Thai government agencies have prepared measures to cushion negative impacts, after learning a lesson from the financial crisis in mid-1997. Following the latest US key rate hike, Somkid projected, the US dollar should become stronger, while countries worldwide, especially emerging economies, are now concerned over capital outflows. According to the deputy prime minister, both the BOT governor and the finance minister are closely monitoring the updated situation. Likewise, Commerce Minister Apiradi Tantraporn opined that the latest US key rate hike should not pose any big problem for Thailand after the country encountered the financial crisis in mid-1997. Apiradi pointed out that Thailand now has external debts less than domestic debts, while the weakening Thai baht is in line with other currencies in the region. Federal of Thai Industries (FTI) Chairman Supan Mongkolsuthee also told journalists that he is not worried over the weakening Thai baht, as it is in line with other currencies in the region. The FTI chief anticipated that Thai exports would depend entirely on the global economy after the US key interest hike, but saying the Board of Investment of Thailand (BOI) has already adjusted investment strategies although it needs some time for the domestic industry sector to recover. In a related development, the Bangkok-based Kasikorn Research Centre (KRC) forecast that the Thai economy should grow by 2.5-3.5 per cent next year, boosted by growing private consumption by 2.1 per cent, public consumption by 2.8 per cent, overall domestic investment by 4.6 per cent and Thai exports by 2 per cent, amid a low inflation of 1.2 per cent. (TNA)