Thai Prime Minister Thaksin Shinawatra on Thursday reiterated that commercial banks should raise both deposit and lending rates at the same time, reported the Thai News Agency Friday.

The Prime minister said the central bank had continued to edge up the repo to ensure local interest rates move in the same direction with those in the United States in order to curb the inflation hike and capital outflow.

More importantly, he said, a spread in deposit and lending rates offered by local commercial banks must not be too wide.

To narrow the gap, the banks need to push up both rates when they decide to make the interest adjustment.

It was reported that the Bank of Thailand (BOT) last Wednesday increased its key interest rate by half a percentage point (0.50 per cent) in the hope of keeping inflation in the final quarter of this year in check.

Deputy BOT Governor Bandid Nijathaworn announced that the Bank's Monetary Policy Committee resolved to increase the interest rate for the benchmark 14-day repurchase rate (repo) by 0.50 percent, thereby bringing the rate to 3.75 percent, which is the highest in five years.

Source: Xinhua