"If the policy rate is cut by only 25 basis points, I believe that some banks would maintain the current interest rates for both deposits and lending as they have already just cut their rates," said the banker who asked not to be named.

"Banks need to maintain the margin between deposit and loan accounts for a while. Reducing deposit rates will take quite a while to realise cost of capital while reducing lending rates will take immediate effect. This will affect the banks' income."

The MPC is now under pressure because the market's forecast is that it will trim the policy rate by 50 basis points at its upcoming meeting as a way to depreciate the stronger baht. A 50 basis point cut is also expected to stimulate the economy.

HSBC and Citigroup have both forecast a 50 basis point cut.

The rise in oil prices since last month, however, may make the MPC uncomfortable about cutting rates in line with the market's expectation.

The Commerce Ministry said yesterday that inflation in March rose 0.7 per cent from February, the first increase in five months, reflecting the surge in oil prices.

Bangkok Bank announced that it would cut fixed deposit rates for amounts of Bt1 million or higher by 25 basis points, with immediate effect.

Following the cut, its new three-month, six-month and 12-month fixed deposit rate for amounts of at least Bt1 million is 3.50 per cent.

For amounts less than Bt1 million, its rate remains unchanged at 3.25 per cent per annum.

Interest rates offered for 24-month and 36-month deposit accounts declined from 3.75 per cent to 3.50 per cent.

However, the bank's minimum lending rate (MLR) remains unchanged at 7.50 per cent.

Kasikornbank and Siam Commercial Bank last month cut their deposit rates by 25 basis points. Many Thai banks recently cancelled special accounts for deposits of Bt10 million or higher.