Aug. 20--Bangkok Bank will likely keep its interest rates unchanged until the year-end due to plentiful liquidity, says president Chartsiri Sophonpanich.

He said ample liquidity in the banking system meant the industry and the bank faced no pressure to adjust rates until the end of 2009.

The current low rates would help borrowers to reduce financial cost burdens, he said.

With the surplus liquidity BBL was ready to lend the government funds to support its "Strong Thailand" stimulus programme, he said.

The government's stimulus packages would help improve the country's economy, said Mr Chartsiri. Economic conditions have shown signs of improved stability since July compared with the dramatic drop in the fourth quarter of last year.

A recovery in the local economy would depend partly on a rebound of the global economy, particularly in the US and European countries, given Thailand's high reliance on exports to large developed economies.

Improving signs for the Thai economy would support lending in the banking sector, but an upturn in domestic investment may take longer to emerge, bankers say.

BBL, the country's largest bank by asset size, plans to maintain its 2009 loan growth target at 0-3 percent, even though it booked a contraction of around 6 percent year-on-year in the first half.

Dr Sathit Uthaisri, the bank's senior adviser, said Thailand's economy would remain difficult for the next three years, despite gradual improvements. The country's exports would show real improvement only with a clear upturn of global economy.

The stronger baht against the dollar would further affect exports, he said. But the greenback is expected to depreciate in line with low demand for the currency as long as the US economy remains weak.

Dr Anusorn Tamajai, Dean of Economics at Rangsit University, forecast that the country's economy would contract 3.5 percent this year.

However, he said growth next year of 2 percent to 2.5 percent would be supported by a global economic recovery and government stimulus spending.

He predicted the Bank of Thailand could cut its policy rate by 0.25 to 0.50 percent over the remaining four months of the year, saying monetary policy still had a role to play in driving economic growth.

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