In a widely anticipated move, the central bank's Monetary Policy Committee (MPC) on Wednesday raised its one-day policy rate by a quarter of a percentage point to 1.75%, the second rate hike in as many meetings.

The increase came after the National Economic and Social Development Board (NESDB) earlier this week announced second-quarter growth of 9.1% from the same period last year and 10.6% overall in the first half from the year before.

But increasing exports, the main driver of growth in the first half, have already begun to moderate in recent months due to base effects and growing uncertainties about the state of the European and US economies.

Mr Korn said yesterday the MPC rate hike was a signal that the overall economy was normalising, even with the negative impact from political instability and Bangkok riots in April and May.

He said despite the rate hike, interest rates overall remain relatively low. And while higher domestic interest rates may result in higher capital inflows, putting further pressure on the baht to appreciate, other countries across the region are also in the process of normalising monetary policy and raising rates to help head off future inflation.

"The rate hike is in line with the government's own economic policies, where we cut new borrowing for fiscal stimulus by half, or 400 billion baht. We have also set a target to return to a balanced budget position within five years," he said.

In any case, Mr Korn said the central bank would have to consider the need and timing of future rate increases if exports and economic growth slowed in the second half.

Regardless, the private sector will have to take a greater role in driving economic growth and domestic investment in the future, while the government focuses more on ensuring that growth is fairly distributed across society, he added.

Areepong Bhoocha-oom, director-general of the Excise Department and tipped to be the next finance permanent secretary, said that with the Thai economy clearly recovered from the 2008 global recession, a greater focus would be put on medium- and long-term development strategy.

Mr Areepong will succeed Sathit Limpongpan as permanent secretary next month at the start of fiscal 2011.

Other key appointments at the Finance Ministry include Naris Chaiyasoot, now a deputy finance permanent secretary, becoming the next director-general of the Fiscal Policy Office, while Phongpanu Svetarundra, now the comptroller-general, will succeed Mr Areepong in heading up the Excise Department.