Monetary Policy Committee’s Decision Dates:

Monetary Policy Committee’s Decision on 2 March 2005

Ms. Atchana Waiquamdee, Assistant Governor of the Monetary Policy Group, Bank of Thailand, announced that the Monetary Policy Committee (MPC) met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance going forward.  The main issues discussed were as follows:

1. Latest data indicated that economic growth in Thailand moderated in December 2004 and January 2005 in response to the negative impacts from the tsunami and drought, while export growth also pointed towards a softer trend. Despite greater risks to growth, the MPC still expected overall growth for the year to be close to that previously forecasted, with private and public investment likely to play a key role in driving the growth process going forward.

2. With respect to economic stability, headline inflation accelerated month-on-month in February on a seasonally adjusted basis, driven by higher world oil prices and an upward adjustment in domestic diesel prices. Core inflation also rose slightly on the same basis. On the external front, although the current account registered a deficit in January as imports picked up significantly and tourism receipts declined, the MPC expected the lapse into deficit to be temporary.

3. The MPC deemed that upward price pressures were likely to build up going forward as production costs had increased considerably in the recent period. Moreover, with growth remaining firm, higher oil prices were more likely to feed into higher inflation. At the same time, the negative fallout from the tsunami had not been more severe than anticipated in the previous meeting.  In this light, the MPC agreed that economic stability and sustained growth in the long term would be strengthened by an upward adjustment of interest rates.

The MPC therefore decided to raise the 14-day repurchase from 2 per cent per annum to 2.25 per cent per annum effective immediately.

Bank of Thailand

2 March 2005

Top...

Monetary Policy Committee’s Decision on 19 January 2005

Ms. Atchana Waiquamdee, Assistant Governor of the Monetary Policy Group, Bank of Thailand, announced that the Monetary Policy Committee (MPC) met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance going forward. The main issues discussed were as follows:

1. Latest data indicated that the Thai economy expanded in the first 11 months at a satisfactory rate, supported by growth in exports, domestic spending, as well as government stimulus measures. Nevertheless, the MPC was of the view that consumer spending could be dampened by the tsunami disaster and the resultant decline in tourism receipts, although these negative effects should be offset, to some degree, by greater investment and public spending.

2. With respect to economic stability, headline inflation fell slightly in December as a result of lower oil prices and the appreciation of the Thai baht, but nonetheless remained high at 2.9 per cent year-on-year.  Core inflation remained subdued at 0.6 per cent year-on-year in December while external stability continued to be strong with the current account expected to register a surplus for 2004 as well as this year.

3. The MPC was of the view that sustained negative real deposit rates may discourage domestic saving and raise household debt. As such, the current low interest rate level should be gradually returned to neutral going forward. Nevertheless, the potential impact on the Thai economy from the occurrence of the natural disaster, volatility in currency markets, and continued high oil prices, remained uncertain and the MPC agreed that it was important to wait for a clearer picture to develop.

The MPC therefore decided to maintain the 14-day repurchase at 2 per cent per annum.

Bank of Thailand

19 January 2005

Top...

Monetary Policy Committee’s Decision on 15 December 2004

Ms. Atchana Waiquamdee, Assistant Governor of the Monetary Policy Group, Bank of Thailand, announced that the Monetary Policy Committee (MPC) met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance going forward.  The main issues discussed were as follows:

1. In the first nine months of this year, the economy expanded at a satisfactory rate, averaging 6.4 per cent year-on-year, with main contributions coming from exports and domestic spending.  Although the recent economic data in October showed moderate expansion in domestic spending, growth momentum remained strong in other sectors, especially exports.  The MPC assessed that there was potential risk of a global economic slowdown, but declining world oil prices should help mitigate the overall risk compared to the last meeting.

2. Regarding economic stability, headline inflation further accelerated in November, albeit at a slower rate of 3.0 per cent.  The MPC assessed that lower oil prices and the appreciation of the Thai baht should help alleviate the inflationary pressure from that previously projected.  External stability remained robust, with the current account expected to be in surplus this year and the next.  Nevertheless, short-term capital flows should be closely monitored to prevent the baht becoming too volatile.

3. Although short-term inflationary pressure from lower oil prices and the stronger baht had declined, the situation could be temporary and should be monitored closely.  To maintain economic stability in light of continued economic growth, the MPC thus deemed that interest rates should adjust upwards going forward as the currently low interest rate environment could pose risk of accelerating inflation and undermine sustainable growth.

The MPC thus decided to raise the 14-day repurchase rate by 25 basis points, from 1.75 to 2 per cent per annum, effective from today.

Bank of Thailand

15 December 2004

Top...

Monetary Policy Committee’s Decision on 20 October 2004

Ms. Atchana Waiquamdee, Assistant Governor of the Monetary Policy Group, Bank of Thailand, announced that the Monetary Policy Committee (MPC) met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance going forward. The main issues discussed were as follows:

1. On the basis of recent economic and monetary information, the MPC was of the view that current economic conditions have been affected by high oil prices, with more consolidation in some economic activities, notably the slowdown in consumption expenditure.  Nevertheless, the economy still has considerable momentum going forward with support from expansion of exports, private investment and government investment. However, external uncertainty has increased, especially regarding oil prices and the global economic outlook, which could pose greater risks to the Thai economy.

2. Economic stability remained satisfactory, with continued current account surpluses and higher international reserves.  Nonetheless, rising oil prices exerted more pressure on the trade balance and domestic inflation.  The latest data showed that headline inflation accelerated to 3.6 per cent in September, while core inflation rose to 0.6 per cent.  Core inflation excluding housing rent—a factor that kept core inflation low during the previous periods—was at 0.9 per cent.

3. Going forward, inflationary risks would be greater, as a result of continued economic expansion, increasing capacity utilization, a tightening labour market, credit expansion, and plausible upward adjustments in the consumer prices due to higher production costs.  These factors would increase inflationary pressures next year, both on headline and core inflation.  Consequently, risks to inflation going forward would be higher than previously estimated.

4. Since domestic inflation is projected to accelerate while the economy’s growth outlook remains satisfactory, the MPC thus deemed that there is less need to maintain the interest rates at low levels.  Domestic interest rates should begin to adjust to the levels that are most consistent with maintaining economic stability.  The adjustment should be gradually paced in order to maintain continued growth momentum with economic stability.

The MPC thus decided to raise the 14-day repurchase rate by 25 basis points, from 1.50 to 1.75 per cent per annum, effective from today, and would closely monitor the effects on economic stability and growth going forward, in order to determine the monetary policy stance consistent with economic conditions.

Bank of Thailand

20 October 2004

Top...

Monetary Policy Committee’s Decision on 25 August 2004

Ms. Atchana Waiquamdee, Assistant Governor of the Monetary Policy Group, Bank of Thailand, announced that the Monetary Policy Committee (MPC) met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance going forward. The main issues discussed were as follows:

1. Given the latest economic data, the MPC viewed that the Thai economy continued to expand, driven by exports and private investment.  However, rising world oil prices is an important factor that should be closely monitored as they could affect future economic expansion and inflation.

2. In July, headline inflation clearly showed signs of acceleration, notwithstanding measures to stabilize domestic retail oil prices.  Headline inflation rose 3.1 per cent year-on-year, or on a seasonally adjusted basis by 0.5 per cent month-on-month.  Core inflation also accelerated, rising 0.7 per cent year-on-year, or 0.4 per cent when seasonally adjusted compared to June.  The MPC viewed that domestic inflationary pressure would be higher going forward due to continuously increasing capacity utilization, rising domestic oil prices, and a tightening labour market.  Consequently, the inflation trend should be monitored closely, especially as the pressure could be higher than that reflected in the price indices because of administered prices of certain commodities.

3. External stability remained satisfactory, with continued current account surpluses, declining external debt, and higher international reserves.  The MPC viewed that continued domestic spending and rising oil prices would increasingly exert pressure on the current account.

4. With regard to financial imbalances, the MPC observed that although currently there were no clear signs of overheating in household debt and the real estate sectors, these two sectors should be closely monitored.

5. The MPC assessed the impact of the rising oil prices to the economy and viewed that escalating oil prices would exert more pressure on economic stability than on economic expansion.  Moreover, robust economic fundamentals and the strong fiscal position should allow the economy to adjust to the rising oil prices without interrupting the momentum of growth.

6. Although the economy continued to expand, the risks to economic stability has increased.  The MPC thus deemed that the need to maintain the interest rate at the presently low level has become less necessary.  Consequently, the monetary policy stance should be adjusted to address the issue of economic stability, with the adjustments being gradually paced.

The MPC thus decided to raise the 14-day repurchase rate by 25 basis points, from 1.25 to 1.50 per cent per annum, effective from today, and would closely monitor risk factors that could affect economic expansion and inflationary pressure, especially oil prices going forward.

Bank of Thailand

25 August 2004

Top...

Monetary Policy Committee’s Decision on 21 July 2004

Ms. Atchana Waiquamdee, Assistant Governor of the Monetary Policy Group, Bank of Thailand announced that the Monetary Policy Committee (MPC) met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance going forward. The main issues discussed were as follows:

1. The MPC viewed that the Thai economy continued to expand, driven by domestic spending and exports, in particular private investment and accommodative monetary policy.

2. With the economic expansion, rising oil and farm prices, headline inflation rose to 3 per cent year-on-year in June 2004. Core inflation, however, remained low at 0.5 per cent.  Going forward, the MPC assessed that the tightening labour market and continued economic expansion would exert pressure on core inflation.

3. During the economic up-cycle, in addition to taking care of inflationary pressure, the main objective of monetary policy, the MPC considered it important to monitor indicators of potential financial imbalances. Currently, the MPC deemed the imbalances in the real estate sector and household debts to be of particular concerns.

4. The MPC considered both internal and external risks which could affect Thai economy growth going forward. Domestic risks included unrest in southern Thailand and the re-emergence of the avian flu which would affect consumer and investor confidence. External risks included the upward trend in foreign interest rates and rising oil prices.

Looking ahead, the MPC viewed that there would be less need for an accommodative monetary policy than at present. The MPC would stand ready to respond once inflation showed a clearer sign of acceleration or the buildup of financial imbalances became more apparent. Given the aforementioned uncertainty of risks, the MPC decided to maintain the 14-day repurchase rate at 1.25 per cent per annum for the time being.

Bank of Thailand

21 July 2004

Top...

Monetary Policy Committee’s Decision on 9 June 2004

Mr. Bandid Nijathaworn, Deputy Governor, Monetary Stability, Bank of Thailand announced that the Monetary Policy Committee (MPC) of the Bank of Thailand met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance going forward. The main issues discussed were as follows.

1. The MPC viewed that the Thai economy continued to expand favourably despite of the slight moderation in growth to 6.5 per cent in the first quarter of 2004 due to the impact of the avian flu and the drought effects on agriculture, while the non-agricultural sector continued to expand well.

2. The MPC was confident that improved economic fundamentals, for example, the recovery in private investment which expanded by 18.8 per cent in the last 4 months, should help the economy to withstand any negative influence reasonably well and should help facilitate economic expansion going forward.

3. Internal stability remained strong with low rate of inflation. External stability was robust. The issue of concern by the MPC was the uncertainties pertaining to rising oil prices which should be closely monitored going forward.

4. The MPC deemed rising international interest rates likely, but the yield curve in the bond market had already priced-in that possibility to a certain extent.

Against this background, the MPC assessed that although current inflation remained low, going forward, inflation could accelerate and thus render a close monitoring of inflationary pressures. The MPC deemed that for the time being, the current stance of monetary policy appropriate given the current conditions. The MPC thus decided to maintain the 14-day repurchase rate at 1.25 per cent per annum.

Bank of Thailand

9 June 2004

Top...

Monetary Policy Committee’s Decision on 21 April 2004

Ms. Atchana Waiquamdee, Assistant Governor of the Monetary Policy Group, Bank of Thailand announced that the Monetary Policy Committee (MPC) met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance going forward. The main issues discussed were as follows:

1. The MPC reviewed the latest data on economic conditions in Thailand and deemed that economic growth in the first two months of 2004 continued to be robust, supported by both domestic and external demand. Although news of the avian flu outbreak and unrest in southern Thailand led to some reductions in consumer and investor confidence, domestic spending remained strong with further increases in the private investment and private consumption indices.

2. External stability remained strong with the current account continuing in surplus and international reserves at a high level.

3. Internal stability remained satisfactory. Headline inflation edged up to   2.3 per cent year-on-year in March from 2.2 per cent in the previous month driven primarily by higher food and beverage prices. Core inflation remained unchanged from the 0.2 per cent year-on-year registered in February.

4. The MPC assessed that the overall economic growth process continued to be sound, supported by robust domestic spending and continued recovery in the world economy. While upward pressure on core inflation became more apparent, it is expected to remain within the targeted range. Nevertheless, the MPC stressed the need to monitor inflation trends in other countries, oil prices, and consumer goods prices closely since they have the potential to affect prices domestically.

The MPC decided to maintain the 14-day repurchase rate at 1.25 per cent per annum.

Bank of Thailand

21 April 2004

Top...

Monetary Policy Committee’s Decision on 17 March 2004

Ms. Atchana Waiquamdee, Assistant Governor of the Monetary Policy Group, Bank of Thailand announced that the Monetary Policy Committee (MPC) met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance going forward. The main issues discussed were as follows:

1. The MPC reviewed the latest data on economic conditions in Thailand and deemed that economic growth in 2003 of 6.7 per cent had been strong, with continued strength in domestic spending helping to support a 7.8 per cent expansion in economic activity in the last quarter of 2003. The growth momentum continued into January 2004, despite some decline in consumer and investor confidence following news of the avian flu outbreak, with further expansion in domestic demand and export values at a buoyant level.

2. External stability remained strong with the current account continuing in surplus, international reserves at a high level, and further reductions in the level of foreign debt.

3. Internal stability remained satisfactory. Headline inflation increased to 2.2 per cent year-on-year in February from 1.2 per cent in the previous month on the back of higher raw food and energy prices. Core inflation edged up to 0.2 per cent year-on-year in February after the 0.1 per cent decline registered in January.

4. The MPC assessed that the overall economic growth process continued to be sound. There are neither clear evidence of accumulating financial imbalances at the sectoral level, nor signs of economic overheating that could adversely affect economic stability going forward. While there could be some upward price pressures from higher production costs and stronger demand, the MPC expected core inflation to remain within the target band.

The MPC deemed that the current policy stance and prevailing rates of interest are appropriate for current economic conditions and, therefore, decided to maintain the 14-day repurchase rate at 1.25 per cent per annum.

Bank of Thailand

17 March 2004

Top...

Monetary Policy Committee’s Decision on 21 January 2004

Mr. Bandid Nijathaworn, Assistant Governor of the Monetary Policy Group, Bank of Thailand announced that the Monetary Policy Committee (MPC) met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance going forward. The main issues discussed were as follows:

1. The MPC reviewed the latest data on economic conditions in Thailand and deemed that economic growth in the first 11 months of 2003 had been strong, supported by robust domestic and external demand. Further increases in the private investment and consumption indices reflected heightened economic activity and improved confidence, supported by higher farm income on account of increases in both price and volume. Export values remained high, while the tourism growth returned to normal.

2. External stability remained strong with the current account continuing in surplus, international reserves at a high level, and further reductions in the level of foreign debt.

3. Internal stability remained satisfactory. Core inflation edged down to 0.0 per cent in December as housing rents continued to fall. For the year, core inflation averaged 0.2 per cent and 0.6 per cent if housing rents are excluded, slightly higher than the 0.5 per cent average in 2002 for the same measure. Headline inflation averaged 1.8 per cent in 2003, driven by an acceleration in raw food and energy prices.

4. The MPC expected economic growth to continue in the foreseeable future supported by strong domestic spending and exports. With the recovery in world economic growth, external risks have receded and an important focus going forward will be on movements of major currencies and their implications. While inflation should remain low and not pose a threat to economic stability, developments in the current account, as well as potential imbalances that might occur with respect to asset prices and household balance sheets, should be monitored closely as growth continues to pick up.

The MPC deemed that the current policy stance and prevailing rates of interest are appropriate for current economic conditions and, therefore, decided to maintain the 14-day repurchase rate at 1.25 per cent per annum.

Bank of Thailand

21 January 2004

Top...

Monetary Policy Committee’s Decision on 12 December 2003

Mr. Bandid Nijathaworn, Assistant Governor of the Monetary Policy Group, Bank of Thailand announced that the Monetary Policy Committee (MPC) met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance going forward. The main issues discussed were as follows:

1. The MPC reviewed the latest data on economic conditions in Thailand and deemed that economic growth in the first 10 months of 2003 had been strong, supported by robust domestic and external demand. With further increases in the private investment and consumption indices in October, on the back of heightened economic activity and improved confidence, the strength of domestic spending should provide a solid basis for future growth.

2. External stability remained strong with the current account continuing in surplus, international reserves at a high level, and the level of foreign debt steady. Measures already implemented helped to ensure stability in movements of the baht.

3. Internal stability remained satisfactory. Headline inflation in the first 11 months of the year averaged 1.8 per cent, on account of higher energy and food prices. Core inflation picked up slightly in November to 0.1 per cent year-on-year after remaining flat for three consecutive months previously, reflecting lower rents.

4. The MPC expected economic growth to continue in the foreseeable future supported by strong domestic spending and reduced external risks. Inflation should remain low and not pose a threat to economic stability. Nonetheless, the movements of major currencies and domestic asset price developments associated with continued economic growth are areas that need to be monitored closely.

The MPC deemed that the current policy stance and prevailing rates of interest are appropriate for current economic conditions and the outlook going forward. The MPC decided to maintain the 14-day repurchase rate at 1.25 per cent per annum.

Bank of Thailand

12 December 2003

Top...

Monetary Policy Committee’s Decision on 28 October 2003

Mr. Bandid Nijathaworn, Assistant Governor of the Monetary Policy Group, Bank of Thailand announced that the Monetary Policy Committee (MPC) met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance going forward. The main issues discussed were as follows:

1. The MPC reviewed the latest data on economic conditions in Thailand and deemed that economic growth in the first 8 months of 2003 had been strong, supported by growth in export and domestic consumption, and improvements in consumer and business confidence. Nonetheless, in August, there was some moderation in growth rates in certain sectors such as private consumption, investment, and export, from very high levels in the first half of the year.

2. External stability remained strong with the current account continuing in surplus, international reserves at a high level, and further declines in foreign debt. Improved confidence in Thailand’s internal and external stability contributed to further appreciation of the baht.

   With respect to speculative short-term capital flows that may affect the baht, the MPC observed that the measures already implemented have helped to curtail the risks of fluctuations in the baht that may impact on the real economy.

3. Internal stability remained satisfactory. Headline inflation in the first 9 months of the year averaged 1.8 per cent, driven by higher energy and food prices. Core inflation remained flat year-on-year in September for the second consecutive month, reflecting lower rents. Excluding the latter, core inflation was 0.5 per cent.

   The MPC expected core inflation in the next 8 quarters to remain in the lower range of the target band. While there is a risk that core inflation may fall below the target band in the near term, this is not construed as deflation since headline inflation remains positive and economic growth continues to be robust.

4. While the MPC expected economic growth in Thailand to remain strong, uncertainty regarding economic recovery in the main industrialized countries continued to pose risks to the Thai economy going forward. The MPC deemed that the policy interest rate was at an appropriate level for current economic conditions, and that an accommodative stance of monetary policy should be maintained.

   The MPC decided to maintain the 14-day repurchase rate at 1.25 per cent per annum.

Bank of Thailand

28 October 2003

Top...

Monetary Policy Committee’s Decision on 11 September 2003

Mr. Thirachai Phuvanatnaranubala, Deputy Governor, Monetary Stability, Bank of Thailand announced that the Monetary Policy Committee (MPC) met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance going forward. The main issues discussed were as follows:

1. The MPC reviewed the latest data on economic conditions in Thailand and deemed that economic growth in the first 7 months of 2003 had been strong, as export and domestic consumption continued to expand, while private investment started to pick up. At the same time, agricultural and manufacturing production grew steadily, while the services sector, especially tourism, began to recover from the effects of the Severe Acute Respiratory Syndrome (SARS) outbreak.

2. Internal stability remained satisfactory. The steady pickup in growth had not generated perceptible upward pressure on prices with headline inflation averaging 1.9 per cent in the first 8 months of the year, mostly reflecting higher energy and food prices.Core inflation in August was flat year-on-year, mostly due to lower rents and the impact of government administered prices on certain goods and services. The MPC did not view this development as an indication of imminent deflation as economic growth remained robust and headline inflation continued to edge up. The MPC also emphasized the importance of building public understanding of the issue as well as continued monitoring of price developments.

3. External stability remained strong with the current account continuing in surplus, international reserves at a high level, and further declines in foreign debt.

4. The MPC assessed that external factors continued to pose risks to the Thai economy and should be followed closely. The level of interest rate was deemed to be low and appropriate for current economic conditions, and the maintenance of an accommodative stance of monetary policy going forward was viewed as appropriate.

   The MPC decided to maintain the 14-day repurchase rate at 1.25 per cent per annum.

5. With respect to the baht, the MPC assessed that additional measures are appropriate for managing short-term capital movements.

Bank of Thailand

11 September 2003

Top...

Monetary Policy Committee’s Decision on 21 July 2003

Mr. Bandid Nijathaworn, Assistant Governor of the Monetary Policy Group, Bank of Thailand announced that the Monetary Policy Committee (MPC) met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance going forward. The main issues discussed were as follows:

1. The MPC reviewed the latest data on economic conditions in Thailand and deemed that economic growth in the first 5 months of 2003 was satisfactory. Growth was buoyed by further expansions in export and domestic consumption, although private investment did not accelerate much and government expenditure was below target. On the production side, the agricultural and manufacturing sectors continued to expand robustly, while the services sector was hampered by a reduction in tourism receipts following the spread of Severe Acute Respiratory Syndrome (SARS).

2. External stability remained strong with the current account remaining in surplus, international reserves at a high level, and further declines in foreign debt.  The baht moved in line with regional currencies and the MPC expected Thailand’s international reserves position to remain strong after the completion of IMF debt repayment at the end of July.

3. The economic recovery thus far had not generated perceptible upward pressure on prices with headline inflation averaging 1.8 per cent in the first 6 months of the year, mostly reflecting higher energy and food prices. Core inflation was subdued at 0.3 per cent and was expected by the MPC to remain in the lower half of the target range over the next 8 quarters. The MPC felt that the probability of core inflation falling below the target range had declined somewhat following the additional easing of monetary policy in June.

4. The MPC assessed that external factors, in particular with respect to the uncertainty regarding economic recovery in the main industrialized countries, as well as economies in Asia, continued to pose risks to the Thai economy.  The MPC stressed the need to closely monitor these developments and assess their impact on the economy, while maintaining an accommodative stance of monetary policy supportive of economic growth going forward.

   The MPC decided to maintain the 14-day repurchase rate at 1.25 per cent per annum.

Bank of Thailand

21 July 2003

Top...

Monetary Policy Committee’s Decision on 27 June 2003 (special supplementary session)

Mr. Bandid Nijathaworn, Assistant Governor of the Monetary Policy Group, Bank of Thailand announced that the Monetary Policy Committee (MPC) met today in a special supplementary session to assess the latest economic and financial developments in order to determine the appropriate monetary policy stance going forward. The main issues discussed were as follows:

1. The MPC deemed that economic growth in the first quarter of 2003 was satisfactory, with activity supported by expansions in domestic spending and exports.  Despite the negative impact on tourism due to Severe Acute Respiratory Syndrome (SARS), latest economic indicators pointed towards continued recovery in the second quarter.

2. Going forward, the MPC assessed that external uncertainties may exert a negative influence on the Thai economy in 2 ways:

   Firstly, despite the recent easing of monetary policy by the European Central Bank and the US Federal Reserve to stimulate growth, it would take some time until the economic recovery process becomes firmly entrenched.

   Secondly, volatility in short-term capital movements has become more pronounced recently, partly as a result of the wider differential between domestic and foreign interest rates, as well as greater inflow of short-term speculative capital.  As a result, stability of the money and capital markets may be affected and baht volatility may increase, with possible adverse consequences for economic activity.

3. The MPC observed that with core inflation remaining low, there was room for monetary policy to ease further in order to safeguard the economy against the external uncertainties outlined above, strengthen the growth process of the Thai economy going forward, and reduce the risks of core inflation falling below the target range in the future.

   The MPC therefore decided to lower the 14-day repurchase rate by 0.5 per cent per annum from the current level of 1.75 per cent per annum to 1.25 per cent per annum, effective today.

Bank of Thailand

27 June 2003

Top...

Monetary Policy Committee’s Decision on 2 June 2003

Mr. Bandid Nijathaworn, Assistant Governor of the Monetary Policy Group, Bank of Thailand announced that the Monetary Policy Committee (MPC) met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance going forward. The main issues discussed were as follows:

1. The MPC reviewed the latest data on economic conditions in Thailand and deemed that economic growth in the first 4 months of 2003 was satisfactory. Industrial production expanded significantly, income from major crops increased strongly—reflecting both higher prices and volume, export grew robustly, while domestic demand continued to improve.  However, tourism and hotel activity was severely impacted by the spread of Severe Acute Respiratory Syndrome (SARS).  In addition, private consumption showed signs of moderating, private investment growth remained modest, and government expenditures expanded more slowly than expected.

2. External stability remained strong with international reserves at a high level and further declines in foreign debt.  The current account remained in surplus, but at a smaller level as sharp reductions in tourism revenue lowered the services account, while the income and current transfers balances also declined.  The baht appreciated as the US dollar weakened but remained in line with other regional currencies.

3. The economic recovery thus far had not generated perceptible upward pressure on prices with headline inflation edging up to 1.9 per cent in May 2003 compared to 1.6 per cent in April.  Core inflation remained subdued at 0.1 per cent compared to 0.2 per cent in the previous month.  The MPC expected core inflation to remain in the lower half of the target range over the next 8 quarters and recognized the risk that core inflation may fall below target in the future.

4. The MPC assessed that the main risks to the Thai economy in the near term emanated from external uncertainties, in particular with respect to the fragility of economic recovery in the main industrialized countries, the negative impact from Severe Acute Respiratory Syndrome (SARS) on regional economies and Thailand’s tourism industry, and the possibility of further declines in the US dollar.  The MPC stressed the need to closely monitor these developments and take stock of their impact on the economy, while maintaining an accommodative stance of monetary policy supportive of economic growth going forward.

   The MPC decided to maintain the 14-day repurchase rate at 1.75 per cent per annum.

Bank of Thailand

2 June 2003

Top...

Monetary Policy Committee’s Decision on 21 April 2003

Mr. Bandid Nijathaworn, Assistant Governor of the Monetary Policy Group, Bank of Thailand announced that the Monetary Policy Committee (MPC) met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance going forward. The main issues discussed were as follows:

1. The MPC reviewed the latest data on economic conditions in Thailand and deemed that the war situation did not significantly impact on the Thai economy, which continued to grow satisfactorily in the first 2 months of 2003 notwithstanding substantial economic uncertainties abroad.  Economic activity was buoyed by further expansion in production and consumer spending, while export growth continued to be steady.  However, domestic investment showed signs of moderating and the fiscal deficit was smaller than expected.

2. External stability remained strong with international reserves at a high level despite commencement of the IMF debt prepayment schedule.  The current account, which was only marginally affected by the war, continued to register a surplus, while foreign debt declined. The baht remained relatively stable against the US dollar and moved in line with other regional currencies.

3. The steady economic expansion had thus far not generated significant upward pressure on prices with headline inflation picking up from 1.4 per cent in 2002 Q4 to 1.9 per cent in 2003 Q1, mostly on the back of increases in energy and food prices.  With pressure on service prices moderating, core inflation continued to remain stable, edging up to 0.3 per cent in 2003 Q1 from 0.2 per cent in the previous quarter.  The MPC expected core inflation to remain within the target range over the next 8 quarters.

4. Although world oil prices have begun to decline, the MPC observed that remaining external uncertainties, in particular with respect to economic conditions in the industrialized countries and the negative impact on regional export and tourism activity from the SARS outbreak, continued to pose important risks to the Thai economy in the near future.  Given these uncertainties and in light of the current low inflation environment, the MPC deemed that the monetary policy stance should remain accommodative to support economic growth.

   The MPC decided to maintain the 14-day repurchase rate at 1.75 per cent per annum.

Bank of Thailand

21 April 2003

Top...

Monetary Policy Committee’s Decision on 3 March 2003

Mr. Bandid Nijathaworn, Assistant Governor of the Monetary Policy Group, Bank of Thailand announced that the Monetary Policy Committee (MPC) met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance going forward. The main issues discussed were as follows:

1. The MPC reviewed the latest data on economic conditions in Thailand and deemed that the economy continued to grow satisfactorily in January 2003. Economic activity was buoyed by further expansion in production, consumer spending, as well as improvements in both consumer and business confidence, while export was not hampered by external uncertainties.  However, domestic investment, especially in machinery and equipment, began to moderate.

2. External stability remained strong with international reserves at a high level, the current account in surplus, and foreign debt on a downward trend. The baht appreciated with respect to the US dollar but remained in line with other regional currencies.

3. The economic recovery thus far had not generated significant upward pressure on prices. Headline inflation fell slightly from 2.2 per cent in January 2003 to 1.9 per cent in February as a pickup in agricultural production helped to lower food prices, while core inflation moderated to 0.3 per cent from 0.4 per cent in January. Core inflation was expected to remain within the target range over the next 8 quarters.

4. The MPC agreed that the main risks to the Thai economy in the near term emanated from external uncertainties, in particular with respect to economic growth in the industrialized countries, higher oil prices, and increased volatility in financial markets. Nevertheless, the momentum of the economic recovery continued to support the Thai economy, while the overall economic environment remained stable facilitating the maintenance of an accommodative monetary policy stance going forward.

   The MPC decided to maintain the 14-day repurchase rate at 1.75 per cent per annum.

Bank of Thailand

3 March 2003

Top...

Monetary Policy Committee’s Decision on 20 January 2003

Mr. Bandid Nijathaworn, Assistant Governor of the Monetary Policy Group, Bank of Thailand announced that the Monetary Policy Committee (MPC) met today to assess the latest economic developments and trends in order to determine the appropriate monetary policy stance going forward. The main issues discussed were as follows:

1. The MPC reviewed the latest data on economic conditions in Thailand and deemed that economic growth in the first 11 months of 2002 was satisfactory, with continued expansion in production, consumer spending, investment, and export supporting the recovery. The pickup in growth in 2002 was driven by fiscal policies aimed at boosting domestic spending, improvements in the external environment over the previous year, and the easing of financial constraints on firms and households, especially from lower interest rates. In addition, domestic spending was buoyed by improvements in business and consumer confidence as well as higher farm income.

2. External stability remained strong with international reserves at a high level, the current account in surplus, and foreign debt on a downward trend.  The baht/US dollar exchange rate fluctuated in line with market conditions and trends in regional currencies.

3. The pickup in economic activity had not exerted upward pressure on prices. Headline inflation rose to 1.6 percent year-on-year in December 2002, reflecting higher oil prices, while core inflation edged up slightly to 0.3 percent. Higher oil and food prices during the last quarter of 2002 contributed to average headline and core inflation rates for 2002 of 0.7 and 0.4 percent, respectively. The MPC expected core inflation to remain low and within the target range of 0-3.5 percent over the next 8 quarters, facilitating the maintenance of the accommodative monetary stance going forward.

4. Overall, the MPC assessed that the economic recovery was progressing well and that the pickup in growth should extend into 2003. Key factors supporting growth in 2003 were expected to include an improvement in the world economy, especially in the latter half of the year, the accommodative monetary policy stance, and a stable macroeconomic environment underpinned by core inflation within the target range. Nevertheless, possible repercussions on the Thai economy of a war between the US and Iraq continued to generate uncertainties in the near future which warranted continued close monitoring.

   The MPC therefore decided to maintain the 14-day repurchase rate 1.75 per cent per annum.

Bank of Thailand

20 January 2003