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As commodity prices, particularly foods and oil products, have increasingly and significantly effected inflation, the BOT is con¬sidering that its monetary policy targeting should be amended.

After Tarisa's statement, HSBC Holdings economist Frederic Neumann predicted that the BOT may cut its policy signal rate if it does shift to use headline inflation to set mone¬tary policy. He pointed out that lower commodity prices would slow price increases. GDP growth my also be slowed if the political tensions still linger and consequently drive down rates, he said.

 His view is in line with recent comments by former BOT gov¬ernor MR Pridiyathorn Devakula.

Pridiyathorn said that the current inflation rate was under control and there was no need for a further interest hike. He believes that countries in Asia will focus more on growth after the drop in the growth rate of about 2 per cent in the second quarter of this year.

The inflation rate is likely to slow down after the oil price drop, which is expected to hold at about US$120 (Bt4,150) for now.

"The oil price will have no opportunity to rise to US$147 again, because when it hit that level the world economic growth dropped severely and caused a drop in oil demand. When the oil price is above US$100, suppliers will have enough profit to invest in oil rigs. Therefore three years from now the oil supply will begin to increase. I think it's supposed to be between $110 and "$120," predicted Pridiyathorn.

 Pridiyathorn said inflation increased dramatically in the first half of the year. Therefore every country upped its interest rate. But in the third quarter, they stopped the interest hikes and some countries began to have a policy to lower the rate.

However, the European Central Bank still remained hawkish. Last week, it left its main interest rate unchanged at a sevenyear high of 4.25 per cent but revised up its forecast for inflation this year and next on the back of higher oil prices. ECB president JeanClaude Trichet said on Friday Eurozone inflation would not return to the European Central Bank's target until 2010, making clear that a cut in interest rates was far from being on the bank's agenda in spite of the risk of a eurozone recession.

Ekarinews@yahoo.com