RPT-New Thai central bank board raises policy doubts

(Repeats story from Tuesday with no change to text)

By Vithoon Amorn

BANGKOK, July 29 (Reuters) - Thailand's cabinet appointed a new Bank of Thailand board on Tuesday that may lead to a watering down of the central bank's efforts to rein in inflation, analysts said.

The new, 12-member Bank of Thailand (BoT) board, empowered to change the composition of the BoT's Monetary Policy Committee (MPC), includes six new appointees favoured by Finance Minister Surapong Suebwonglee, who disagreed with a recent BoT decision to raise interest rates.

Under an amended Bank of Thailand Act, the board is now chaired by someone from outside the central bank rather than by its governor as in the past.

The new board is headed by Pornchai Nujsuwan, a former head of the Budget Bureau and once an adviser to former Prime Minister Thaksin Shinawatra, who was ousted in a coup in 2006 and whose allies are now back in power.

Finance Minister Surapong is one of Thaksin's most trusted aides.

The pro-government appointees include a retired assistant central bank governor but also national police chief General Pacharawat Wongsuwan, current and former senior finance ministry officials, and a top prosecutor.

"The new appointees are people not particularly noted for their monetary expertise, a quality one would expect from people sitting on the BoT board," Associate Professor Lae Dilokvidhyarat of Bangkok's Chulalongkorn University said.

"Their backgrounds raise the question of whether the central bank would in future become an agency more responsive to government pro-growth policy," he said.

RUMOURS

The new board also has the authority to change the BoT governor, a prerogative previously held by the finance minister and the cabinet.

Governor Tarisa Watanagase, who has in recent months put priority on fighting inflation rather than supporting economic growth, is due to retire in just over a year but there are persistent rumours the government wants her to go sooner.

The MPC raised its policy rate by 25 basis points in mid-July to fight inflation, which hit a 10-year high of 8.9 percent in June.

Most analysts expect the central bank to raise the rate by another 25 basis points at its next meeting in late August.

The BoT forecast on Monday that inflation would average 7.5-8.8 percent this year, up from the 4.0-5.0 percent expected in April and just 2.3 percent in 2007.