The private sector is encouraged to exploit the opportunities that these technologies entail in terms of efficiency gains, adaptability and overcoming labour shortages which remain widespread across sectors and skill levels. So far we have managed to address these gaps partly through labour activation policies targeting nationals and partly through foreign labour. However, one has to acknowledge that the national working age population is what it is. With the male participation rate already around the euro area average, a better utilisation of the domestic component of the labour supply can only be achieved if more women take up employment or if the labour force works longer. Alternatively, production processes would need to rely on upgraded technology, such as automation and artificial intelligence. While further gains in the female participation rate are possible, these will likely materialise only gradually, as the participation rate of younger females already exceeds that in the euro area as a whole, while that of older females does not adjust upwards easily, as these tend to have fewer skills and experience or have to care for dependants. Longer hours are probably not compatible with a better quality of life. Technology upgrades through, for example, automation and artificial  Page | 5  intelligence offer a promising avenue, but can be very costly for small firms and also require skills and financing that are not immediately available. Their effectiveness rests on a more active participation in training and re-skilling programmes as well as entrepreneurial willingness to support innovative activities.

The task is even more daunting when the world is going through significant transformation, with unprecedented policy actions all across the globe, and with yet-to-be- known consequences of such actions and their unwinding. Faced with the uncertainty and the complexity of the environment we are operating in, we need to take a broader perspective and make sure our decisions are robust under different plausible eventualities. At the same time, the Bank of Thailand constantly strives to expand our economic surveillance capability, by collecting up-to-date intelligence on economic and financial conditions through indirect and direct contacts with the market. The insights from direct contact, coupled with the information from surveys like our Business Sentiment Survey sharpen the picture we get from the other available statistics. This is one reason why monetary policy cannot simply follow mechanistic and simplistic rules based solely on any single data. Nonetheless, uncertainties can never be off the table. In this light, a prudent approach is to move in careful and measured steps. That kind of incremental action in what we perceive to be the right direction is likely to contribute more to economic stability than aggressive attempts to fine tune the economy. BIS central bankers’ speeches  3  3. Inability to address supply-side impediments  The third limitation of monetary policy I would like to emphasize today is its inability to address supply-side impediments. Through interest rate adjustment, monetary policy can influence aggregate demand in the economy.