IR, april 09 - Inflation Report April 2009 The Inflation...

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Inflation Report April 2009 Inflation Report April 2009 The Inflation Report is prepared quarterly by staff of the Bank of Thailand with the approval of the Monetary Policy Committee (MPC). It serves two purposes: (1) to provide a clear forward-looking framework for economic and inflation forecasting to assist the MPC in making monetary policy decisions and (2) to give the MPC an opportunity to present the explanation for their decisions on various policy issues to the public. Although individual MPC members may have differing opinions regarding the assumptions on which the forecasts are based, as a group they are in agreement with the forecasts on the outlook for inflation and output as well as the risk factors involved as illustrated in the fan charts. The Monetary Policy Committee: Mrs. Tarisa Watanagase Chairman Mrs. Atchana Waiquamdee Vice Chairman Mr. Bandid Nijathaworn Member Mr. Chakramon Phasukavanich Member Mr. Ampon Kittiampon Member Mr. Ammar Siamwalla Member Mr. Praipol Koomsup Member
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Inflation Report April 2009 Thailand Monetary Policy Strategy Monetary Policy Formulation The Monetary Policy Committee (MPC) sets monetary policy in order to attain price stability conducive to sustainable economic growth. The MPC also monitors factors contributing to external stability and financial imbalances. The Monetary Policy Instrument The MPC utilizes the 1-day bilateral repurchase transaction rate as the key policy rate to signal the monetary policy stance. The Target The MPC uses core inflation (excluding raw food and energy) as its policy target with the range of 0-3.5 per cent (quarterly average). In the event that the target is missed, the MPC is required to explain the reasons thereof to the public. Forecasting Tools To assist the MPC in making monetary policy decisions, the Bank of Thailand has developed a macroeconomic model to forecast economic conditions and inflation outlook. The model is also employed to evaluate the impact of various factors on the economy and to offer guidelines for appropriate monetary policy responses.
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Inflation Report April 2009 Contents 1. Overview 1 2. Inflation and Economic Conditions 7 • Inflation trends 7 • Aggregate demand in 2008 Q4 10 • Trend of aggregate demand in 2009 Q1 14 • Production and supply in 2008 Q4 17 • Trend in production and supply in 2009 Q1 19 3. Monetary Conditions and the Exchange Rates 23 • Monetary base and money supply 23 • Money market conditions 25 • The banking system 29 • Exchange rates and capital flows 36 Box: The credit channel of monetary policy transmission under 34 current circumstances 4. Financial Stability Conditions and Outlook 41 • Non-financial corporate sector 41 • Household sector 43 • Real estate sector 44 • Financial institutions 45 5. Economic Growth and Inflation Outlook 49 • Forecast assumptions 51 • Output and inflation projections 57 • Assessment of risks 60 • Forecasts by research houses 67 Box: The impact of the global financial crisis on Asia and other 61 emerging market economies 6. Conclusion 69
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IR, april 09 - Inflation Report April 2009 The Inflation...

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