The Bank of Thailand raised interest rates 25 basis points to 3.75 percent Wednesday in a bid to tame soaring inflation, despite government concern about the impact on slowing economic growth.
The move came in the wake of reports that the central bank and the finance ministry have been at loggerheads over borrowing costs in one of Southeast Asia's biggest economies.
Bank of Thailand assistant governor Duangmanee Vongpradhip said economic growth had slowed in the second quarter to an annual rate of 5.3 percent due to waning domestic demand, lower government spending and high inflation.
Thai inflation reached a decade high of 9.2 percent in July, but Duangmanee said interest rates were now at the right level.