This is a real dilemma faced by the monetary policy-makers, because either way there is a price to pay.

As Supavud Saicheua of Phatra Securities says, "Nobody really knows the correct monetary decision. We'll only know whether it's right or wrong six months from now. If the rate remains unraised, and in six months prices spiral out of control, then we'll know we made the wrong decision. If the rate is raised, and six months from now the economy ends up really weakened, then we'll know we've made the wrong decision."

If past comments by Bank of Thailand Governor MR Pridiyathorn Devakula are any indication, then we can expect the Monetary Policy Committee to raise its policy-signal rate at today's meeting. Pridiyathorn has expressed concern about accelerating inflation and negative real interest rates. He is also worried about price instability created by higher oil prices.

If monetary policy does not reflect continued vigilance, it could result in a second-round surge of inflation if prices are allowed to spin out of control, because Thailand is heavily dependent on imported energy. Higher energy prices have raised production and transport costs, resulting in higher prices for products and services. And if there were expectations that prices would rise even further, then that would pose a threat to the economy. Then we might witnesses a spiralling effect of price rises that could destabilise the economy as a whole.

However, caretaker Finance Minister Thanong Bidaya views the situation differently. Thanong has been arguing that if the rate does rise further, it will hurt the economy even more at a time when there are signs of slowdowns in investment and consumption. He is urging the monetary authorities to keep the rate unchanged, in order to give the economy some room to grow. A higher interest rate would also place additional burdens on the cost of borrowing by businesses.

The rule of thumb is that in an election year, no politician likes high interest rates.

Thai policy-makers face a dilemma about whether they want growth or stability. Today's decision will be particularly difficult against the backdrop of the ongoing political crisis.

But Pridiyathorn has been running the central bank with credibility and independence, winning praise from financial markets and policy-makers elsewhere. He is expected to make the best decision for the country.

That said, an increase of 0.25 percentage points in the Thai short-term rate should not prove too strong a medicine for our economy. Financial markets will be watching the monetary authorities' statement closely.

If the statement shows that the authorities have reached the end of the monetary-tightening cycle, then financial markets will react positively. But if the authorities continue to express concern about the pace of inflation, then we can all expect many sleepless nights still to come.

The United States currently faces a similar dilemma as to whether it should emphasise inflation or growth. The Fed funds rate is now being kept at 5 per cent, but judging from statements made by the Federal Reserve Board, the US rate might go higher, maybe to 5.25 per cent.

If this were to happen, then it would be all the more certain that the Thai rate would rise in tandem. Thailand being an emerging-market economy, it needs to keep its rate at a competitive level, in order to attract capital inflow that would help develop the country.