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Published on July 9, 2007

"The market would read into the expectations on the policy stance and could act on it ahead of the next meeting, resulting in the committee not having to make an actual policy [rate] change," Atchana Waiquamdee, the deputy governor of the Bank of Thailand, said last week.

Meeting synopsises would be a signal to the market of the direction the committee wants it to take, leading to more efficient market behaviour, she said.

The measure would be implemented when the Bank of Thailand Act, which aims to improve the central bank's transparency, is passed.

Earlier, Chodechai Suwanaporn, director of the Finance Ministry's Fiscal Policy Office, suggested that the central bank should reveal the vote of each committee member along with the reasons for decisions.

The disclosure of each member's policy viewpoint would increase transparency of the central bank, he said.

But Atchana said the level of financial literacy here was not yet ready for that. It could put pressure on each member to hide his real intention and make his decision according to the market's wishes.

Of all the central banks in the world, only a few, such as the US Federal Reserve, provide a detailed account of policymaking decisions, including each committee's vote and the arguments expressed. But the effect on the market is not significant because minutes are released months after a meeting, she said.

The MPC will probably consider changing its inflation targeting policy and acceptable inflation range at its next meeting on July 18 to better reflect economic conditions, she said.

The panel will judge whether core or headline inflation is appropriate for inflation targeting and what inflation range is best. The range will be approved taking into account inflation targeting and the trend of other regional countries in order to maintain the country's competitiveness.

Earlier, Atchana said the central bank probably would go for core inflation with a narrower range calculated on a year-on-year basis. Currently, the policy is to maintain core inflation between zero and 3.5 per cent on a quarterly basis.

The policy change must be implemented at a proper time and should not cause the public to panic, she said.

Anoma Srisukkasem

The Nation