BANGKOK, 21 April 2011 – The Bank of Thailand (BoT) has voiced its belief that the recent decision of the government to peg diesel prices below 30 baht per liter until September can help tame the escalating inflation rate.
Speaking about the mounting concern over the rising inflation rate and the diesel price subsidy policy of the government, BoT Governor Dr Prasarn Trairatvorakul expected that oil prices this year tend to remain high.
Dr Prasarn suggested that the government should send signals it would float diesel prices in order to reflect the real costs and allow all sides to adjust themselves to energy conservation since such a policy could not be adopted for long.
The governor nonetheless admitted that the policy would be able to help reduce headline inflation rate by 0.7% to stay around 2.5-4.5% and core inflation rate by 0.3% from the projected figure of 2-3%.
Dr Prasarn also indicated that the BoT would raise the oil price control measure to the consideration of the Monetary Policy Committee when the latter had to revise the monetary policy and interest rate.
