The Monetary Policy Committee is likely to raise its policy signal rate at today's meeting after fiercely debating whether economic growth or stability is in greater danger.

The dilemma over whether to shore up the economy, which has been weighed down by negative factors, or rein in prices, which have surged on rising oil prices, is expected to make today's decision one of the hardest ever taken by the committee.

Bank of Thailand Governor MR Pridiyathron Devakula did not give a clear sign on whether the central bank's committee would keep bumping up the 14-day repurchase rate or leave it unchanged at 4.75 per cent.

However, his comments on the economic situation seem to imply he prefers to keep inflation under control.

He said the government's latest stimulus measures would not help the economy as much as it had expected. However, the Finance Ministry's move to accelerate fiscal spending was the right action.

"Despite the delay in the election and budget disbursement, the economy is still in decent shape. Last year, we managed to survive risk factors such as droughts and [the] tsunami and this year we have faced rising oil prices, political uncertainty and the hold up in budget expenditure," he said.

"We have confronted risk factors for two years but the economy still can grow at a satisfactory level of 4-5 per cent."

On Friday Pridiyathorn met caretaker Prime Minister Thaksin Shinawatra amid public concern over whether the premier would exert more pressure on the central bank chief to help boost the economy.

Both the Finance Ministry and National Economic and Social Development Board (NESDB) have recently expressed worries about economic performance.

The governor dismissed talk of political intervention in the rate decision-making, saying the premier allowed him independence in setting monetary policy.

Tough talk is expected to be the order of the day when the seven committee members meet and debate. Although the members are not required to vote, the minority is expected to follow the majority in making a decision on the path for the policy rate. Only one voice could give the final verdict.

The following are the expected stances of each member of the committee.

Pridiyathorn and his two deputies, Bandid Nijathaworn and Tarisa Watanagase, are likely to play a conservative role, standing on the side of stability, even though they believe that inflation in the second half will ease due to the low-base effect. Yesterday the governor reiterated his intention to see real deposit interest rates turn positive by September.

Chakramon Phasukvanich, permanent-secretary of the Industry Ministry, is likely to favour growth, given his work experience at the NESDB and Board of Investment, whose policy focus is expanding the economy.

NESDB secretary-general Ampol Kitti-ampom has clearly expressed anxiety over the economic slowdown, particularly when the state think-tank revised downward its economic growth forecast for this year to 4.6 per cent. Ampol said inflation would be tamer in the second half.

Arun Thammano, a former permanent-secretary of the Finance Ministry, has not publicly discussed his views on the economy, but is likely to prefer growth, based on his background.

The direction of Krikkrai Jirapaet, a former permanent-secretary of the Commerce Ministry, is also difficult to anticipate. He has not been involved in overseeing inflation but his top position in the ministry should encourage him to attack inflation.

No matter what the four experts' decisions are, no vote will be taken at the meeting. Pridiyathorn said he could convince the members to follow what he believes.

What makes a rate rise sound reasonable for the Thai central bank is the remark made by US Federal Reserve Chairman Ben Bernanke on Monday that he was more concerned about rising inflation than the cooling of the US economy. That was his strongest message so far that US interest rates are likely to be raised further. Bernanke argues that keeping inflation low is vital to promoting a strong economy because it allows people to make purchases, borrow money, plan for retirement, invest and make other financial decisions without worrying about rising prices.

The Thai market, said Prasarn Trairatvorakul, president of Kasikornbank, is more interested in the rationale that the central bank will use for its rate decision rather than on whether the 14-day repurchase rate would rise or stay where it is.

Prasarn, who was once an executive at the central bank, said economic data give equal weight to a decisions to raise the key rate or leave it as is.

Domestic consumption and investment are slowing and the country's real interest rate is expected to be positive soon, he said. Kasikornbank has forecast the inflation rate at 4.3 per cent over the next year.

Anoma Srisukkasem,

Somruedi Banchongduang

The Nation