BoT: 0.3% core inflation in Q3

Core inflation should stand at 0.3 per cent in the fourth quarter of this year and 1.4 per cent for the entire year, the Bank of Thailand (BoT) reported on Wednesday.

The 0.3 per cent projection was still lower than the new inflation target of 0.5 to 3.0 per cent, BoT assistant governor for the monetary policy group Paiboon Kittisrikangwan said.

Core inflation should be within the inflation target by the end of 2010, he said.

The central bank's Monetary Policy Committee had maintained the policy interest rate because it viewed that the core inflation would be within target in the future, he said.

It would not be necessary for the committee to adjust the policy interest rate until there was new economic information to consider.

"The committee is responsible for keeping inflation within projection by using appropriate measures, but it would not respond to the movement of inflation by adjusting the policy interest rate all the time because inflation is a temporary phenomenon," Mr Paiboon said.

He said adjusting interest rates could create unnecessary fluctuations.

"The BoT and the Finance Ministry will meet at the end of 2009 to determine the new inflation target for next year even though countries that have an inflation target policy do not change it regularly as it may create confusion.

"Some countries may want to stimulate the economy in the short term but they could face problems in the long run and the growth would not be sustainable. As for Thailand, we have to create price stability because it is a condition for a sustainable economic growth," the banker said.