- 1990s to around 14 per cent now. however, food currently accounts for over one - third of our wholesale price index ( wpi ) and over onehalf of our consumer price index ( cpi ). since the food economy is essentially dependent on domestic production, fluctuation in agricultural production has a direct bearing on output and inflation. it is important, however, to note that the adverse impact of a fall in agricultural output is significantly less on gdp than on inflation because of still a very high weightage of food in our price indices. as you know, weather plays an important part in agricultural production. we have seen this over the years that the volume and spatial distribution of monsoon rains have a significant impact on agricultural production and hence food inflation ( chart 1 ). but can deficient monsoon satisfactorily explain the recent trend in food inflation? let me turn to this issue in a little more detail. bis central bankers ’ speeches if we look closely at food price index for a longer period, we could notice two structural breaks, one at the beginning of financial year 2000 – 01 and the other in the middle of 2007 – 08 ( chart 2 ) 1. it is interesting to see that average food inflation declined to 3. 8 percent per annum during the 8 - year period 2000 – 08 from 7. 1 percent per annum in the second half of the 1990s despite higher gdp growth of 7. 2 per cent per annum as against 6. 7 per cent in the estimated trend based on bai - peron methodology covering monthly wpi data for the period 1994 : april to 2013 : november. bis central bankers ’ speeches preceding period. the period 2000 – 08 experienced two years of deficient monsoon in 2002 – 03 and 2004 – 05, in spite of that food inflation remained contained suggesting in a way that the impact of monsoon on food inflation has waned. in the subsequent 5 - year period, 2008 – 09 to 2013 – 14 so far, not only that the average food inflation rose sharply to 10. 3 per cent per annum, it has remained persistent. arguably the trigger for high food inflation emanated from the drought of 2009 – 10. but good rains in the following years have failed to douse food inflation. there are several other explanations such as that global food prices also rose and our exchange rate depreciated which exacerbated domestic food inflation. but subsequent moderation in global food prices has not dampened our food inflation. of course food inflation has come

ladies and gentlemen, we, should not be under the illusion, however, that good fundamentals can be taken for granted. in fact, the slowdown of economic growth in the recent years pinpoints to structural problems, holding back the economy. chief among these are supply bottlenecks such as a shortage of labour and public infrastructure, eroding competitiveness and productivity, and corruption. if not properly addressed, these could restrain the country ’ s growth potential in the medium term. the good news is that ongoing developments in thailand are constructive. the current reform agenda holds promises for moving the country forward. the national reform committee, along with other task forces, has been founded to push forward muchneeded measures. ( slide 4 ) the bank of thailand is currently involved in the reform of stateowned enterprises, as this sector includes 8 state - owned financial institutions ( sfis ), whose asset size accounts for approximately a quarter of total assets in the thai banking system. starting from this year, we at the bank of thailand are appointed to be a “ regulator ” for such financial institutions, whilst the ministry of finance remains a “ policy - maker ” and an “ owner ”. this is one of the reform attempts to clearly separate the roles among those involved, in order to avoid potential conflict of interests and to ensure that sfis are subject to a proper supervision akin to that of commercial banks. ( slide 5 ) while the reform efforts are welcome developments, to what extent reform plans will be put into action remains to be seen. one of the main challenges will be keeping the reform momentum going, as certain reforms may take years to complete. i think of sustainable reforms as running a marathon. you have to keep going steadily, slowly but surely. it ’ s not sprinting as fast as you can for 100 meters until the finish line. if you told me today to run a full marathon tomorrow, i could not make it. but, if you gave me time to prepare and get fit, i would be in the run. monetary policy let me now devote the last few minutes of my talk to update you about our monetary policy. throughout the last couple of years, the monetary policy committee has maintained an accommodative policy stance to support the economy. mindful of downside risks to growth, the committee carefully adjusted the degree of policy accommodation to ensure sufficient support to domestic demand and to shore up confidence. since may 2013, the policy rate was cut three times, as lower risks