Thai finmin wants more rate cuts, plays down wage impact
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Thailand's finance minister called for more cuts in interest rates, just days after the central bank opted against further easing for now, and said a big rise in minimum wages from January should not push inflation up too high.
Kittirat Na Ranong told Reuters in an interview on Monday that he expected the economy to grow more than 5 percent this year and about five percent in 2013.
He forecast that exports, the mainstay of the economy, could grow 10 percent next year. Even so, he wanted lower interest rates to help business.
"I have never changed my stance. I do not agree with interest rates like this," said Kittirat, who has advocated lower interest rates to help business and the economy.
He said: "The (policy) interest rate, in many cases, went up fast. And when others reduced interest rates quickly, we were also slower in doing so."
The Bank of Thailand left its policy rate unchanged at 2.75 percent on Nov. 28, taking a more optimistic view on the global economy after cutting the rate by 25 basis points in October to sustain domestic demand as exports softened.
Before October, the last time the Thai central bank trimmed rates was in January, to help the economy recover from devastating floods in late 2011. The minimum wage rose by 40 percent in April, taking it to 300 baht ($9.78) a day in seven provinces including Bangkok.
The other 70 provinces will get another increase of as much as 35 percent from January, taking the minimum to 300 baht around the country, as the ruling party promised ahead of its election victory in July 2011. Companies are against the rise. "Next year, inflation should not be a problem. Look at this year, wages went up 40 percent this year but inflation was only 3 percent," the minister said.
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