In addition, their profitability will help enhance their capital base over time. Last but not least, inflationary pressure is stable due to a substantial fall in oil price from last year. Headline inflation, though currently in negative territory, is expected to gradually rise, and turn positive in 2016. Deflationary risks remain contained as demand continues to expand, and prices of most non-energy items remain stable or trend upwards. Such inflation trajectory is consistent with medium-term expectations of the public and the Bank of Thailand’s medium-term inflation target. Overall, the economy and our financial system show a good sign of stability and resiliency. BIS central bankers’ speeches  3  Let me now turn to implications for the real economy and begin by giving you some positive news, that is, the economy is likely to register stronger growth momentum next year. Tourism continues to show good prospects where the number of tourist arrivals is likely to exceed 30 million in 2016. Fiscal stimulus will continue to be a key growth driver. Public expenditure is expected to increase by more than 200 billion Baht from this year, providing support to the economic recovery, especially the construction sector. In the private sector, there are signs of investment expansion in construction, telecommunications, and alternative energy, among others. Although we may see export contraction in 2015, there are resilient spots in certain sectors. Exports to CLMV economies have experienced strong growth, and continue to show great potentials from which Thailand could capitalize.

The decision-making process now evolves around decision-making by a committee rather than relying on individuals as in the past. In some of the committees, well-qualified individuals from outside the Bank of Thailand have been invited to be members. Between each committee, emphasis has been put on the ability to communicate and exchange information. The change in this decision making process has resulted in the implementation of policies based on collective decision-making, accuracy and up to date information, most importantly, the co-ordination between the committees has helped reduce policy inconsistency. On monetary policy, following the change to a floating exchange rate system, there was a need for a new monetary policy framework. On this issue, the Bank of Thailand believes that the Inflation Targeting framework, which is being used today, is very appropriate to the present conditions and is well suited for Thai economic and monetary structures. Keeping inflation at a low level is an important pre-condition in maintaining economic stability of the country in the long run. Most importantly, under this framework, the Bank of Thailand must set clear monetary policy targets, be transparent in its decision-making, and accountable for its policies. The Bank of Thailand Monetary Policy Board announces its decision every six weeks, and so far has published two Inflation Reports. At present, the new monetary policy framework has been accepted at a certain level. More importantly, for it to be highly successful and efficient, the Bank of Thailand must be independent in implementing its policies.