In this regard, I  2  BIS central bankers’ speeches  believe that our Flexible Inflation Targeting framework will continue to serve us well. This conclusion is based not solely on Thailand’s favorable experience with the framework, but also echoes the experiences of many other central banks around the world. Supplementing this framework with macroprudential measures should help to further strengthen our ability to deliver long-term economic and financial stability. While the current monetary framework gives priority to inflation, the BOT gives a balanced consideration to economic growth and financial stability as well. In the face of severe disruption to economic activity from the floods, elevated risks and uncertainties from the global economy, and moderating inflationary pressure, monetary policy has recently shifted toward addressing risks to economic growth. This is reflected in the two consecutive reductions in the policy rate in the last two meetings before yesterday. These actions have helped to shore up confidence and accelerate the return of economic activity to normal levels. At this juncture, upside risks to inflation have begun to increase. Externally, geopolitical problems in the Middle East have pushed global oil prices up strongly. Domestically, postflood pickup in public and private spending is adding to demand pressure. In addition, various government measures, including the reduction in the oil subsidy and a hike in the minimum wage, may also boost prices in the short term. As I understand, the minimum wage increase is one of the chief concerns for many of you here.

I believe that these existing solid fundamentals that I have just outlined will help Thailand emerge strongly from the economic setback we recently experienced. However, in a constantly shifting global landscape, we policymakers cannot be complacent with the status quo. A lot remains to be done to guarantee the continued strength of our economy. The key impetus falls on structural reforms that lift Thailand’s international competitiveness. This will not only enable Thailand to reap the full benefits of the emerging trend of regional integration, but also ensure sustainable growth in the long run. Considerable adjustment and transformation of our economy will be required. Bottlenecks to businesses due to structural rigidities will need to be removed. Factors of production will have to be upgraded and reallocated to activities that offer the most promising way forward. Government policies and laws will have to be updated and changed to best facilitate such structural adjustments, all the while making sure that the burden of adjustment on those who stand to lose is bearable. As should be apparent, these challenges cannot possibly be completely met in the short-term and will require long-term commitment from both the public and private sectors. The BOT’s role in meeting these challenges is, first and foremost, to deliver on our mandate of ensuring macroeconomic stability. A stable macroeconomic environment will not only foster business-friendly climate and make the process of structural adjustment easier, but it is also a key prerequisite for long-term sustainable growth.