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The Bank of Thailand (BoT) Monetary Policy Committee is likely to reduce the one-day repurchase rate (the policy interest rate) by at least 50 basis points to 2.25 per cent at the first round of its meeting for this year on January 14, according to Kasikorn Research Center.

The leading think tank attributed the moderate repo cut to mounting concern over economic expansion risks and a sharp inflation reduction.

A decline in the inflation risk could give MPC enough flexibility to further cut the policy interest rate.

KRC said the overall picture of local and foreign economies remains very fragile with many forecasters planning to further cut the economic growth estimate worldwide for this year.

It projected the Thai economy would be in recession in the fourth quarter of last year until the first half of next year.

General inflation is expected to continue at a low level, perhaps moving to deflation during some months of this year.

The Kasikorn forecasters said the easing of fiscal and monetary policy adopted by the Abhisit government is expected to soon be able to pull the economy out of its sluggishness.

However, credit risks and concerns over financial liquidity in the business sector and government stability remain unabated and must be monitored.

In an attempt to spur the country's economic growth and control inflation, the Bank of Thailand (BoT) Monetary Policy Committee (MPC) on Wednesday raised its benchmark interest rate by 25
basis points to 3.75 per cent with immediate effect, according to a senior central bank official.

BoT assistant governor Duangmanee Vongpradhip said the MPC had agreed at its meeting to raise its policy interest rate, which is expected to help boost the country's economy.

The real interest rate at end-July this year remained contracted, said Ms Duangmanee, adding that deposit and lending interest rates contracted 4.8 and 2 per cent respectively.

The Thai economy during the second quarter this year grew at a slower place than the first quarter due to lower government spending and a high rate of inflation, she said.

However, declines in global oil prices and Thailand's continued impressive performance in the export area would help boost the national economy in future, Ms Duangmanee said.

However, the MPC cautioned that because of a possible volatility in world oil prices plus expected local high inflation in future, inflation would remain a significant factor which needs to be closely monitored, she said.

Wednesday's hike in the policy interest rate was made despite an earlier objection by Virabongsa Ramangkul, new chief economic advisor to the prime minister

Industry and Deputy Prime Minister Suwit Khunkitti on Thursday said foreign investors are still confident about investing in Thailand despite risk factors from global economic uncertainties and local political disturbances.

He said the foreign investors wanted to invest in the development of various industries, particularly the auto parts industry, which has significant growth potential. For instance, APICO Hitech Plc continues to expand its investment in Thailand.

Mr. Suwit advised investors to cash in on the free trade area (FTA) agreements Thailand had made with its trading partners for a maximum benefit of their investment.

Yeb Su Chuan, president of APICO Hitech, said that although Thailand's domestic auto market had expanded at a slower pace, the company enjoyed sound first-quarter operating results because of increased exports.

He said he is confident that the company's revenue this year would increase 15 per cent with a 10 per cent net profit growth.

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