Despite the changes, the central bank left unchanged its economic growth projection of 4.75-5.75 per for the year.

It expects the economy to expand at the lower range of its forecast, said Atchana Waiquamdee, the BOT's assistant governor.

She said a slowdown in private investments, earlier projected to grow by 9-10 per cent, was likely though growth would remain relatively strong.

She said the current investment slump was being caused by negative sentiment brought on by political conflicts, and not by a change in economic fundamentals.

The central bank's economic forecast is made independent of sensational and short-term events.

"Private investment may be delayed but it should continue to grow by 8-9 per cent. Utilisation in many sectors is already running at full capacity and needs investment to further expand," she said.

"Many companies have recorded high profits and a 1- to 1.5-percentage point change in lending rates is not expected to increase funding costs for these firms much," she said.

The Monetary Policy Committee (MPC) did not discuss political issues at its meeting yesterday, said Atchana.

 The committee raised the 14-day repurchase rate by 0.25 percentage point to 4.5 per cent to correspond with the US Federal Reserve's recent rate hike. It considers high oil prices as a risk factor for the economy.

Atchana said core inflation, which is headline inflation excluding raw foods and energy, may move above the 3.5-per-cent ceiling.

But headline inflation has been slowing, she said.

In addition, real 12-month deposit rates were still in negative territory at minus-0.85 per cent at the end of February.

She said the Dubai crude price was US$2.5 (Bt100) a barrel higher than the level when the last MPC meeting was held in January. But a stronger baht has since helped reduce the pressure of rising fuel prices.

Thailand recorded 4.7 per cent growth in the fourth quarter of last year, compared with 5.4 per cent in the third quarter.

The figure reflected a slight drop in domestic demand. Still, higher oil prices have slashed consumer spending though incomes of civil servants had been raised.

The BOT projected total investment this year would grow by 10.5-11.5 per cent, with private investment climbing 9.5-10.5 per cent and public investment growing 12.5-13.5 per cent.

Meanwhile, Siam Commercial Bank will today raise fixed deposit rates 25-50 basis points and it will raise its lending rates 25 basis points across the board.

SCB's three-, and six-month deposit rates now stands at 2.75-3.75 per cent and 3-4 per cent, respectively. Its 12-month deposit rate has been raised 50 basis points to 3.5-4.25 per cent. The bank's 24- and 36-month deposit rates have been raised by 25 basis points to 4-4.25 per cent and 4.25 per cent, respectively.

Its minimum lending rate and minimum retail rate now stand at 7 per cent and 7.5 per cent respectively.

Anoma Srisukkasem

The Nation