Role and independence
- The Monetary Policy Committee (MPC) shall set a monetary policy target annually with cabinet approval. And it shall conduct monthly economic and monetary reports for the cabinet's consideration and submit a performance report to the cabinet every six months.
- Monetary policy targets inflation but is also meant to maintain economic growth in terms of the government's economic policies. The aim is to allow the economy to grow to its full potential with stability.
Foreign exchange volatility
- The central bank stands ready to implement measures to tame the baht if it appreciates rapidly or is out of sync with economic fundamentals, while the MPC is prepared to revise the short-term policy interest rate to address baht volatility or threats to economic growth.
- The objective is to allow the baht to move in line with regional currencies instead of pursuing a policy of depreciation, which will cause an opportunity loss for local firms to improve technology. The authorities should have specific measures to ease the currency impact on small businesses.
- The economy's vulnerability to currency volatility is different now than during the 1997 economic crisis. External debt is low, the economy's current account healthy and the banking system strong. The flexible exchange system allows the baht to reflect economic fundamentals.
Policy interest rate
- The policy interest rate is not higher than other countries with a similar financial system. It is at almost the same level as inflation.
- The policy interest rate is determined considering the early signals of overheating stock and property markets, high lending growth and the continuous increase of household debt to 78% of gross domestic product.
Bank of Thailand's losses
- Most of the losses come from the bank's purchase of foreign currencies using baht to maintain baht stability. These losses will not affect confidence or the effectiveness of monetary policy if they can promote stability and are based on acceptable reasons.
Source: Bank of Thailand