With the current rate of inflation hovers at around 8 to 9 per cent, banks may revise up both deposit and loan interests by 1 per cent, Kasikorn Research Center’s managing director Pisal Manoleehakul said on Wednesday.

Mr. Pisal noted that the banks are normally revising interest rate every six months in order to catch up with inflation.

“If the rate of inflation reached 10 per cent, we will see both deposit and loan interests go up by 1 to 1.5 per cent,” he said.

“If the gap between interest and inflation wider, depositors will have a feeling of being squashed and move their money to the markets that pay out higher yield,” Mr. Pisal said. “The current rate of 12-months fixed deposit is around 4 to 5 per cent at small banks and 3.5 to 4 per cent at larger banks while the rate of current inflation is around 8 to 9 per cent.”

A news source involved in Thai Military Bank said that the rate of loan interest is likely to reach double digit figure by 2009; if the rate of inflation stayed at around 7 to 8 per cent and the oil prices continued to rise in 2008.