the crisis. however, there are vulnerable segments given the uneven nature of recovery especially smes in sectors that are lagging and low - income households. therefore, targeted measures will still be in place to support vulnerable groups. although raising interest rates may increase financial burdens for indebted households to some degree, the potential costs of sustained high inflation is much greater. therefore, the mpc judged that policy rate hike will not harm financial stability and will in turn help prevent inflationary pressures that will hurt consumption in the future. [ 3. 2 what should we really be worried about? ] given the reasons and trade - offs outlined above, we are taking a gradual and measured policy normalization approach. however, there remain certain issues that raise concerns to some. let me take this opportunity to clarify several issues : ( 1 ) thailand is not behind the curve the context of thailand is different from other countries that have begun their rate hikes a while back. 1. thailand ’ s economic recovery is still in an early stage and lags others due to heavy tourism reliance. a. in terms of the economy ’ s cyclical position, we have started our hiking cycle relatively fast compared to others. compared to many central banks, including those in major economies as well as in the asian region, that started raising policy rates only after gdp reached or exceeded pre - pandemic levels at their 1st hike, the mpc has started to normalize policy well before that milestone, with the thai economy expected to reach pre - pandemic level only at the end of this year. 2. high inflation in thailand has mostly been attributed to extraordinarily large supply shocks, while there are limited signs of inflation being broad - based or entrenched as demand - side pressure has so far been contained, inflation expectations are well - anchored, and the likelihood of wage - price spiral in thailand is low. a. the rise in headline inflation has been supply - side driven, 60 % of which attributed to food and energy - related categories and is expected to dissipate without monetary policy response. demand - pull inflation is limited as the economic recovery is still in early stages. the rise in core inflation is predominantly due to direct effect and supply - side factors, rather than second - round passthrough effect due to demand pressure. meanwhile, medium - and long - term inflation expectations are well - anchored within the target range. b. the impact of weak baht on inflation via exchange rate passth

liberalization of the capital account, justifiably anticipated larger inflows of capital, which create new environment for our economy, together with the risks from instability and speculative pressures. this is imposed also by our strategic determination for admission of the republic of macedonia to the eu - which ultimately means reaching an institutional capacity adequate to the criteria of the maastricht agreement from 1992 in order to be prepared to join the european system of central banks. we should even further increase the capacity of supervision. therefore, new regulations, which we develop together with the ministry of finance are already underway, as well as new intensive activities for gradual shift towards risk - based supervision, as a basis for implementation of the new capital accord - basel 2. at the same time, we should improve our capacity for analyzing the financial stability of the country - activities we have started, but which require great efforts and dedication. i would like to express my gratitude on behalf of the national bank to all of you who in various circumstances and under serious challenges contributed to the development of an institution such as the national bank of the republic of macedonia. the monograph we prepared on this occasion - 60 years of central banking in the republic of macedonia, is primarily a tribute to them. i would like to thank all of you who are here tonight, deeply feeling the historical significance of this jubilee!