|Unit||% p.a., NSA|
|Adjustments||Not Seasonally Adjusted|
|Data||13 Sep 2019||1.5|
|12 Sep 2019||1.5|
|Lending Rate||13 Sep 2019||1.5||1.5||% p.a., NSA||Daily|
|Stock Market Index||12 Sep 2019||1,660||1,674||Index, NSA, 30 Apr 75 = 100||Business Daily|
|Treasury Bills (over 31 days)||Aug 2019||1.53||1.69||% p.a., NSA||Monthly|
|Money Market Rate||Jul 2019||1.7||1.7||% p.a., NSA||Monthly|
|Average Long-term Government Bond||Jun 2017||2.57||2.76||%||Monthly|
Monetary Policy Scheme:
Inflation targeting regime (23 May 2000- present): After the IMF program, the Bank made an extensive reappraisal of both the domestic and the external environment and concluded that the targeting of money supply would be less effective than the targeting of inflation. The main cause for change was that the relationship between money supply and output growth became less stable over time, particularly since the financial crisis.
With the exit from the IMF program, it became necessary for authorities to identify a new policy anchor which would be appropriate for Thailand. The Bank of Thailand announced the adoption of inflation targeting in May 2000, with a main objective of maintaining price stability. Given the institutional reforms required for an inflation targeting framework to operate successfully, it was envisaged that inflation targeting would help rebulid confidence and credibility of the central bank and monetary, going forward
Under the inflation targeting framework the Monetary Policy Board (MPB) was first appointed on 5 April 2000 and vested with the power to decide monetary policy by the Governor. The MPB, with 9 members, comprised distinguished external experts and the top management of the Bank. The MPB had the authority to set the direction of monetary policy with price stability as the overriding objective, and also to refine the inflation targeting framework to suit the Thai economy. At present, however, the Monetary Policy Council, comprising 7 members - 3 from the Bank of Thailand and 4 external members - is responsible for deciding on the direction of monetary policy.
The new Bank of Thailand Act, B.E. 2551 (2008) was enacted on 3 March 2008. The new BOT Act clearly states the Bank of Thailand's objectives and responsibilities as the nation's central bank, in maintaining monetary stability, stability of the financial system, and stability of the payments system.
|Price stability is defined through an environment of low price volatility. This in turn implies keeping inflation at a low level that is consistent with economic growth, which facilitates planning and decision-making for consumption, production, saving and investment in the longer term.|
· Preservation of consumers’ purchasing power
· Supporting national competitiveness
· Reducing pressures on the exchange rate
· Reducing volatility of the real interest rate
· Reducing uncertainty, which would otherwise negatively affect planning economic decision-making of households and businesses in their decision making
· Promoting a better overall economic climate
In the past, Thailand has had a satisfactory record of price stability. Since the introduction of the inflation targeting framework in 2000 up until the present, the quarterly average of core inflation has remained within the target of 0-3.5% throughout this period.
Schedule of MPC meetings
The MPC meets regularly to discuss and assess economic developments and set monetary policy 8 times each year. By encouraging the public to closely follow the outcome of each meeting, a predetermined schedule will help enhance the transparency of monetary policy and facilitate the conduct of commercial operations both domestically and abroad.
The monetary policy decisions
The MPC sets monetary policy that is consistent with domestic economic conditions to ensure price stability and sustainable economic growth. In addition, the MPC plays an important role in determining guidelines for exchange rate policy that is consistent with the monetary policy stance.
Approximately every 6 weeks (8 times a year), the MPC meets to assess the economic and financial conditions as well as the risk factors that may affect future inflation and economic growth in its consideration of the monetary policy direction. In each meeting, the MPC Secretariat presents the latest economic data on financial market conditions, fiscal position, international financial environment, and production, as well as other factors that may affect the price level, including world commodity prices and US interest rates. The plausible trends of these variables are widely discussed and subsequently incorporated into the inflation and GDP forecasts.
Given the forward-looking nature of monetary policy, and given the time lags before monetary policy takes effect, monetary policy needs to be pre-emptive and forward-looking. Monetary policy therefore relies on a number of instruments, namely (1) the Bank of Thailand’s Macroeconomic model, which is used make forecasts of relevant economic variables, (2) assumptions regarding external factors not determined endogenously within the economy, such as expectations of oil prices or growth of trading partners’ GDP, for instance, which would help in making such forecasts.
The MPC takes these factors into consideration in their monetary policy decision. At 14.00 hours on the day of the meeting, the Secretary to the MPC holds a press conference where a written statement is released, and the Secretary is available to answer questions. At the same time, and going forward until the next meeting, the Bank of Thailand undertakes open market operations to ensure that the policy rate is held - as close as possible - to the level determined by the MPC.
Each quarter, the Bank of Thailand publishes a quarterly Inflation Report to present the latest economic and inflation forecasts to the MPC in a clear and forward looking manner, as well as communicate to the general public views of the MPC to in reaching their various policy decisions.
Source of Monetary Policy: http://www.bot.or.th/English/MonetaryPolicy/Decision/Pages/DecisionProcess.aspx