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The Bank of Thailand is reviewing three choices for its new monetary policy target - core inflation, headline inflation, or core inflation plus raw food.

Yesterday, 28 economists and academics met at the central bank to brainstorm over the best measure of price changes for policy-setting purposes, as well as the most appropriate range for the target given the current situation, but could not reconcile their opinions.

But most thought that headline inflation was the best target for the Kingdom.

The calculation methods were also a topic for debate. For example, headline inflation might be based on an average for the whole year.

The Monetary Policy Committee is supposed to make a recommendation by next month and enter into a joint agreement with the Finance Ministry in accordance with the new BOT Act in December. Besides the kind of monetary target, the two policymakers also have to set the target range.

Over the past several years, the committee has used its monetary tools to try to keep the country's core inflation within the target range of 0-3.5 per cent.

Somphob Manarangsan, an economist from Chulalongkorn University, said headline inflation could reflect the actual cost of living of the general public better because it included oil and food, which accounts for 50 per cent of the basket of goods tracked to compute the consumer price index.

"The inflation [rate] is the means, not the end. The target should be helpful to people and business. The headline inflation [rate] can reflect the cost of living better than core inflation," he said.

After this global financial crisis works it course, headline and core inflation would gradually converge because speculative inflows would dissipate, he said.

Praipol Khumsap, an economics lecturer at Thammasat University, said headline inflation could indicate trends in the cost of living better, but core inflation, including raw food, was another interesting choice to consider.

Headline inflation, which includes energy and raw food, is sometimes volatile and this would present problems for the Monetary Policy Committee in pursuing monetary policy, said Praipol, who is a member of the MPC.

"The central bank must test headline inflation with real figures to find out if it fluctuates or not," he said.

BankThai executive Banluesak Pussarangsee said headline inflation has determined the direction of core inflation in recent years but it is difficult to be controlled. Core inflation is easy to control but it does not mirror the real cost of living.

Praipol said the ministry and the central bank should search for the best solution based on academic reasons rather than a political agenda.