9 Aug 2008

Thai economic dispute escalates

8:03 am on 9 August 2008

A dispute between the Thai government and the country's central bank about economic policy has escalated.

Thailand's finance minister Surapong Suebwonglee said the central bank must focus on boosting economic growth rather than fighting inflation, something the bank opposes.

He said central bank governor Tarisa Watanagase would not be sacked, but urged a change of policy.

The central bank raised rates from 3.25% to 3.5% last month, in response to a jump in consumer price inflation to more than 9%. More raises have not been ruled out.

The BBC reports the government and the bank have been on a collision course in recent weeks over the best remedy for Thailand's economic problems.

The central bank next meets to discuss interest rates at the end of the month.

Deputy bank governor Atchana Waiquamdee said on Thursday that it would consult with ministers before making its decision, but the decision would rest with it alone.

Inflationary pressures are causing headaches for central bankers across the region:

South Korea raised rates to a seven-year high of 5.25% on Thursday, but figures issued on Friday showed producer prices are at a 10-year high.