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Inflation Cap No Longer Guideline for New Thai Govt
The new Thai government will announce measures to stimulate the economy, helped by a review of the current inflation-targeting policy, the Bangkok Post reported Monday.
In its statement to the Parliament, probably next Monday, the government is expected to make clear that monetary policy is subservient to fiscal measures in reviving the economy.
Surakiart Sathirathai, the newly appointed foreign minister and former finance minister, discussed the thrust of the new direction of economic policy, which he has had a major role in drafting.
The Monetary Policy Board of the central bank had signaled to the markets that the targeted annual ceiling for inflation for the next two years would be 3.5 percent, he was quoted as saying.
"In fact, inflation is lower than that, so it's not necessary to set such a target. The target signals only that the central bank prefers to see low economic growth," Surakiart said.
Although he did not say the government would directly intervene in the central bank's monetary policy, he said the finance minister would send a signal to the markets that the government would stimulate the economy to achieve strong economic growth.
"The signals by the finance minister should be enough to boost market sentiment and stimulate the economy."
The Foreign Ministry would cooperate with Thailand's neighbors to establish a "common production base" to boost the region's competitiveness in world markets, Surakiart said, adding that Thailand would move toward a common position with neighboring countries in international trade forums, such as the World Trade Organization.
"Thailand will persuade other Asian countries which have suffered from the currency crisis to publicly explain to the rest of the world our problems, our experiences and our solutions. We will not allow G7 (major industrialized nations) to continue dominating us with policies which could cause another crisis for us in the future," he said.
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