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Thai rate hikes should not be too late as inflation climbs, central bank chief says

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© Reuters. FILE PHOTO: Thailand’s central bank is seen at the Bank of Thailand in Bangkok, Thailand April 26, 2016. REUTERS/Jorge Silva

By Orathai Sriring and Kitiphong Thaichareon

BANGKOK (Reuters) – Thailand’s central bank governor said on Monday that delaying rate hikes for too long would not be good for the country as inflation continues to climb, in remarks that prompted economists to predict an imminent rate hike.

Inflation is expected to rise beyond the central bank’s 1-3%target range this year, and is seen peaking at 7.5% in the third quarter, Bank of Thailand Governor Sethaput Suthiwartnarueput told a business seminar and reporters.

But any hikes will be gradual as concerns remain about a recovery in the vital tourism sector, he said. Sethaput did not say how soon and how much rates would be increased.

Policy tightening should not be done too late to avoid sharp increases, he added.

“It’s not hitting the brakes on the economy,” he told the seminar, adding there was less need for very accommodative monetary policy as the economy clearly recovered.

The return of Southeast Asia’s second-largest economy to its pre-pandemic level, however, would be late this year or in early 2023, lagging other countries, he said.

Last week, the central bank left its key rate unchanged at a record low of 0.5%. But in a 4-3 vote, the three dissenters favoured a quarter-point hike, citing increased upside risks to both growth and inflation.

The BOT will next review policy in August, when economists expect a rate increase.

Last week, the BOT raised its 2022 economic growth forecast to 3.3% from 3.2% and sharply increased its inflation outlook to 6.2% from 4.9% seen earlier.

The economy is not expected to face an economic crisis, just high inflation, Sethaput said, adding external stability was good and capital flows were not a worry yet.

A weak baht at five-year lows against the dollar has not accelerated inflation much, he said, adding the BOT would not be complacent and would closely monitor.

Economy

Oil Russia ban news: Russia will ban the sale of its oil to countries that have imposed a price ceiling

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oil Russia ban

Will Russia sell oil to Europe? The administration of President Vladimir Putin is preparing an order prohibiting Russian companies and any trader from buying Russian oil to sell raw materials to countries and companies that have imposed a price ceiling on Moscow. Bloomberg news agency wrote this, citing a report from sources.

“The Kremlin is preparing a presidential decree banning Russian companies and any traders buying national oil from selling it to anyone who participates in the price ceiling,” the publication wrote.

According to the newspaper’s interlocutors, this would prohibit any mention of the price ceiling in contracts for Russian crude, as well as transferring it to countries that have joined the price ceiling for the natural resource.

In the first half of September, the press service of the US Treasury Department said that the USA, together with its allies from G7 (Great Britain, Germany, Italy, Canada, France and Japan) and the European Union (EU) would impose a ban on marine transportation of Russian oil on December 5 and oil products – on February 5.

Earlier we reported that EU negotiations on limiting the prices of Russian oil reached a deadlock today.

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Economy

EU talks on restrictions on Russian crude oil prices today stalled

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russian crude oil price today

Negotiations between the European Union countries about the “ceiling” of Russian crude oil prices today reached an impasse; Bloomberg reported, according to its sources.

Representatives of the bloc cannot reach an agreement on the ceiling price of Russian oil. According to the agency, the proposed European Commission limit of $65-70 per barrel, Poland and the Baltic countries believe “too generous,” while Greece and Malta, which is actively engaged in transporting fuel, do not want the limit to fall below $ 70. Recall that the Russian response to the oil price cap was negative. The Russian government has officially said that it will only sell oil at market prices.

“We are looking for ways to make this solution work and we are trying to find a common ground to implement it in a perfectly pragmatic and efficient way, while avoiding that it may cause excessive inconvenience to the European Union,” said German Chancellor Olaf Scholz.

Earlier, we reported that the SEC fined Goldman Sachs $4 million for non-compliance with ESG fund principles.

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Economy

More than 50% of Germans said they had given up shopping for new clothes and electronics. Is Germany’s economy failing?

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is germany's economy failing

Die Welt newspaper cited a survey by the consulting company EY and said that about 56% of Germans who took part in the survey said that they had practically refused to buy new clothes.

Also, 56% of German consumers reported that they now refrain from buying televisions, smartphones, laptops and game consoles. Also, nearly one in two now uses less gasoline, and one in four said they are saving on medications.

What caused the economic crisis in Germany? The main reason is the war in Ukraine and the resulting sanctions by the EU. Also, every second respondent reported that at the moment he could buy only the essentials. According to EY analysts, German households plan to further reduce spending in the coming months. In particular, they plan to save money on food delivery and entertainment.

Earlier, we reported that prices for liquefied natural gas in Asia reached their highest since October.

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