UPDATE 1-Thailand watching inflation, no rate hike now-c.bank

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By Natsuko Waki

MADRID, May 4 (Reuters) - Thailand's central bank is monitoring inflation closely, but would wait before raising interest rates, deputy governor Atchana Waiquamdee told Reuters on Sunday.

Thailand's annual headline inflation hit a two-year high of 6.2 percent in April, driven by high oil and food prices.

"At the next MPC (Monetary Policy Committee) meeting we have to watch (inflation) very closely," Atchana said on the sidelines of the annual meeting of the Asian Development Bank.

"We watch for the second round effects because the unemployment rate is low and perhaps we see some recovery in domestic demand."

When asked if time was right to raise interest rates, Atchana said: "I think we have to wait."

Rising inflation however is not expected to stifle growth as a recovery in consumption and recovery underpins growth.

The Bank of Thailand has held its key rate at 3.25 percent since last July after cutting it five times in 2007.