Thai economic dispute escalates

Ministers want the central bank to recognise growth as a priority.

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

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

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

The central bank has not ruled out more rate rises to tackle inflation, a move ministers think will hurt the economy.

'Rival directions'

It raised rates from 3.25% to 3.5% last month, in response to a jump in consumer price inflation to more than 9%.

Like many Asian countries, Thailand is struggling to cope with the economic and social effects of higher fuel and food costs.

One policy must stay and the other must go Surapong Suebwonglee, Thai finance minister

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

Government and bank policies should be "pointing in the same direction" Mr Surapong said on Friday.

However, he stopped short of endorsing calls from other members of the government for Mrs Tarisa to step down.

"Policy differences won't lead to demotion of the central bank governor," he said. "But if that difference is so wide, one policy must stay and the other must go."

The spotlight will now be on the central bank when it 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 that 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, a day later, figures showed producer prices at a 10-year high.