Capital flow into Thailand 'unlikely' if rates are cut

Interest rates in other Asian countries are generally higher than the Thai policy rate of 3.25 per cent, he said.

Assets in those countries should remain more attractive even if US-Thai interest rate spread widens further, Surapong told reporters.

The minister said any change in the Bank of Thailand's policy rate would have to balance growth against the risk of stoking inflation.

The central bank's Monetary Policy Committee is slated to review the policy rate on May 21.

The Commerce Ministry's recent revision of inflation forecast for the year to 5-5.5 per cent from 3-3.5 per cent was due to rising oil and food prices.

The move was in line with the estimates of the Ministry of Finance, he said.

"This should not cause any problem. The government will be cautious to ensure that the economy grows at a balanced rate."

The composite Stock Exchange of Thailand Index yesterday dipped 0.14 per cent to close at 832.45 points. Turnover was relatively thin at Bt15.84 billion ahead of the Labour Day holiday today.

"The stock market moves very narrowly. It either goes up or down by not more than three points. There was no new development," KTB Securities assistant managing director Supakorn Sujiratwimol said.

"Energy stocks put pressure on the stock market while banking stocks saw flat trading," he said.

Investors eyed the Fed's upcoming decision and largely stayed on the sidelines.

Most economists expected a 25-basis-points cut.

Futures contracts on the Chicago Board of Trade in Illinois showed an 80-per-cent chance the Fed would trim its target for overnight lending between banks by a quarter point to 2 per cent.

The rest of the bets are for no change.

There's a 38-per-cent chance policy-makers will push the rate back up to 2.25 per cent by year-end, the contracts indicated.