* IMF says capital inflows are complicating policy
* Sees GDP growth of 7.5 pct in 2010, 4 pct in 2011
* Interest rate rise next week looking far less certain (Adds details throughout, quotes)
By Jason Szep and Orathai Sriring
BANGKOK, Oct 15 Thailand could take "prudential measures" and further liberalise capital outflows if inflows are sustained and threaten to create asset bubbles, the International Monetary Fund said on Friday.
Surging inflows into Thailand's markets could complicate policymaking in Southeast Asia's second-biggest economy, the IMF said, projecting GDP growth of 7.5 percent this year and about 4 percent next year as aggressive fiscal stimulus is rolled back.
Thai policymaking is already getting complicated. An interest rate rise that looked like a sure bet at the Bank of Thailand's policy-setting meeting next Wednesday is now in some doubt.
While a majority of economists expect the rate to rise a quarter point to 2.0 percent, a minority say the bank will stand pat, and almost none expected that in August. [ID:nSGE69D0BQ]
Thailand and other emerging Asian countries are redoubling their efforts to resist capital inflows that are boosting their currencies and undercutting the competitiveness of the exporters at the heart of their trade-reliant economies.
"With the economy recovering rapidly, capital inflows could complicate policymaking," the IMF said in a report on the Thai economy. "(IMF Executive Directors) broadly agreed that, in such circumstances, the exchange rate should be allowed to serve as a buffer."
"Should sustained inflows threaten to create asset bubbles, consideration could be given to introducing prudential measures and further liberalising capital outflows," it added.
Thailand's government agreed on Tuesday to impose a 15 percent withholding tax on capital gains and interest income from foreign investment in government debt in a bid to curb the baht, which is at its highest since the 1997 Asian financial crisis.
Thailand is treading carefully after imposing tough capital controls in late 2006 that triggered the biggest one-day sell-off in the stock market. They were later lifted.
The Finance Ministry launched a series of measures in September to relax restrictions on capital outflows such as scrapping a $200 million a year limit on direct investment and lending to affiliated companies abroad by Thai firms.
Others included allowing lending to non-affiliated companies abroad of up to $50 million a year, and doubling the amount Thais can invest in offshore property to $10 million.
The steps have had little impact.
Strong inflows have helped push the baht THB=TH up nearly 12 percent against the dollar this year. Its real effective exchange rate, which measures its value against trading partners' currencies after adjusting for prices, is near a record high.
Bank of Thailand Governor Prasarn Trairatvorakul said on Friday the central bank would exercise caution in adopting any additional measures to deal with the baht's fast appreciation.
"It's normal that we have to prepre our menu list, our measures in hand. But stringent measures will have side effects, so what to use and when, we have to look at the real situation," Prasarn told reporters on the sidelines of a symposium.
He said capital inflows would be among the factors examined when the central bank reviews interest rates next week.
Finance Minister Korn Chatikavanij said this week the government would consider more measures if there was "excessive speculation" in the currency. (Additional reporting by Boontiwa Wichakul; Editing by Alan Raybould)