April  (Bloomberg) -- Thailand may raise borrowing costs for the sixth time in less than a year as Asia strives to damp inflation stoked by surging commodity prices and capital inflows.

The Bank of Thailand will raise its benchmark one-day bond repurchase rate by a quarter of a percentage point to 2.75 percent, according to all 20 economists surveyed by Bloomberg News. The decision is due at 2:30 p.m. in Bangkok tomorrow.

Thailand would join China in tightening monetary policy this month after economic growth and oil at more than $100 a barrel helped drive inflation to a seven-month high. Thai Prime Minister Abhisit Vejjajiva has added price controls, kept oil subsidies and pledged higher wages to ease the impact of rising costs ahead of a general election he may hold as soon as June.

“Thai rates right now aren’t consistent with the strong growth we’re seeing, and inflation in the second half will rise much more than it has in the first as some subsidies are unwound,” said Ramya Suryanarayanan, an economist at DBS Group Holdings Ltd. in Singapore. “We’re probably only about halfway through in terms of rate hikes across Asia and we have quite a bit more to go.”

The Thai baht has climbed more than 7 percent against the dollar over the past year, according to data compiled by Bloomberg, rising along with most Asian currencies as the region that led the recovery from the 2009 global recession attracted foreign investment. The baht traded at 30.12 per dollar as of 10:13 a.m. in Bangkok, unchanged from yesterday.

Interest-Rate Swap

The onshore one-year interest-rate swap, the fixed cost needed to receive a floating payment, has increased 111.5 basis points this year and reached the highest level since December 2008 this month, indicating growing expectations for higher rates. The rate has added 22 basis points since the last policy meeting on March 9. A basis point is 0.01 percentage point.

Bank of Thailand Governor Prasarn Trairatvorakul said last week inflation will accelerate in the second half and may climb as much as one percentage point once the government removes subsidies. He shgnaled further rate increases last month, saying growth is “less of a concern so the risk balance is tilted toward inflation.”

Consumer prices advanced 3.14 percent in March from a year earlier, the fastest pace since August last year. Core prices, which exclude fresh food and fuel, rose 1.62 percent, accelerating from a 1.45 percent pace in February. The central bank uses the core index to guide policy and aims to keep it below 3 percent.

“The Bank of Thailand is trying to build up buffers by raising rates now so that it can cut later if needed should there be an unexpected slowdown,” said Tetsuo Yoshikoshi, a Singapore-based senior economist at Sumitomo Mitsui Banking Corp.

Asian Tightening

The central bank raised rates by a quarter point each in July, August, December, January and March. Counterparts from India to South Korea also boosted borrowing costs last month, while China has lifted reserve ratios and increased its deposit and one-year lending rates this month.

The Thai economy may expand 4.2 percent in 2011, less than the 4.5 percent estimated earlier, Finance Minister Korn Chatikavanij said April 8. The impact of Japan’s strongest earthquake on record, domestic flooding and high crude prices are among reasons why, he said.

Thai Airways International Pcl, the nation’s largest carrier, said March 28 its total daily revenue had fallen 5 percent in the past two weeks because of a decline in demand from Japan.

Export growth climbed to an eight-month high in February on sales of Thailand’s agricultural, automotive and electrical- appliance products.

While disruption from the temblor may damp trade, Commerce Minister Porntiva Nakasai said March 18 Japan’s rebuilding drive should subsequently boost Thai shipments to that nation by as much as 20 percent this year