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The business daily saw the central bank's move as a means by which it could avoid becoming a scapegoat for blame if an economic crisis erupts due to uncontrollable rising prices.

Veteran economist Virabongsa Ramangkura earlier said he opposed an increase in the policy rate, saying the Thai economy would suffer if that happened.

During the oil crisis in 1984, Virabongsa suggested the central bank devalue the Thai baht to promote Thai exports and maintain the country's foreign-exchange reserves. But the central bank instead decided to raise the rate. In 1997, Virabongsa suggested the central bank not fight with currency speculators. Eventually, the Thai baht went down to Bt56 to the dollar after the change of the exchange-rate regime. These past two crises were the result of overspending a high current-account deficit.

Yesterday, the Bank of Thailand decided to raise interest rates to curb inflation. Some believed the rate rise would further exacerbate the problem. But Dr Somchai Jitsuchon, from the Thailand Development Research Institute, said the central bank didn't have any choice except to raise the rate to curb price increases.

The inflation rate is as high as 7 to 8 per cent. But the saving rate is only 2 per cent after tax. The wide gap between the inflation rate and the saving rate will lead to diminishing savings, according to Somchai.

He said that the Bank of Thailand could thus explain its decision to raise the rate by 25 basis points of a percentage point, and would even have been able to justify increasing the interest rate by 50 basis points because of the unclear economic signals. Besides, the government's recent six-point anti-poverty campaign, which requires a budget of Bt46 billion, would lead to an increase in the fiscal deficit, he said.

The central bank's Monetary Policy Committee thus doesn't want to be blamed if the economic situation worsens. It decided to raise the policy rate, saying the inflation risk affects the private sector's confidence. Krungthep Turakij said that the central bank's stance showed it doesn't want to take full responsibility for the economic slump. The bank's reasoning is that if the Thai economy continues to suffer due to the unstoppable rise in the price of oil, the responsibility for the poor economic conditions will fall on both the fiscal and monetary sides. The country's economic problems require attention on both fronts.

In a related story, Daily News criticised the Samak government's decision to launch six populist measures to ease economic hardship as a result of the rising oil prices. It said that although the measures are designed for the short-term, they would help around 9.8 million households. These families should be able to save around Bt1,000 per month. But the government would lose around Bt49.4 billion in revenue.

The measures can be seen as helping Thais, but at the same time, they can also be seen as a populism policy introduced at a time when the Samak government's political capital is low. Although both the prime minister and finance minister strongly denied that the measures are politically-motivated, they would instantly shift the public back to the government's side because of the benefits they'll get from the programmes, the newspaper said.

 No one will refuse benefits from a short-term government programme. But the consequences of the measures need to be determined by the government and related persons; specifically the government must clarify where it will get the money to pay for such expensive measures.

Besides, over the long-term, the public will be forced to face the burdens connected to a higher cost of living. Daily News finished by saying it hoped the measures would not turn out to be a fiscal burden and a contributing factor to a further crisis.