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Inflation policy changing?

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Long-term central bank inflation policy ensures that people's purchasing power is not eroded and exports remain competitive. 

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Note that Thailand's central bank has had an official monetary policy of inflation targeting to control inflation for over a decade (See Wikipedia and bank website). Today's article also raises the issue of central bank independence (See Wikipedia and Palgrave Economics Dictionary and academic review and previous Bangkok Post articles: #1 #2 and #3).

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INFLATION: BoT chief repeats concerns by Parista Yuthamanop


 The Bank of Thailand wants to ensure that inflation stays at a competitive level to that of regional trade partners with comparable purchasing power, says governor Prasarn Trairatvorakul.

He was responding to comments by Suchart Thada-Thamrongvech, a key member of the Pheu Thai Party economic team, who said the new government could accept inflation in a range of 5-6%.

The central bank currently forecasts inflation of 4.1% and economic growth at 3.9% for this year.

"We want to discuss with the new finance minister the logic of their proposals," said Dr Prasarn. "We would not want inflation to be higher than in regional trade partners, or the competitiveness of our production would be eroded. High inflation would also undermine people's purchasing power.

He also said the recent strengthening of the baht reflected improvements in short-term political stability after the election that gave Pheu Thai an outright parliamentary majority.

"The cause of optimism is also from the fact that leaders of the two key political parties exhibited their high maturity toward politics and a favourable attitude after the elections. The country had earlier been viewed by the world as immature in terms of domestic politics," Dr Prasarn said.

He said foreign capital inflows would likely increase in the future as foreign investors held underweight positions in the Stock Exchange of Thailand.

Unfolding fiscal problems in the United States and Europe could result in foreign investors pouring more funds into Asia for better growth prospects.

"Uncertainty about China's economic slowdown has emerged as a risk in Asia. There has been growing doubt in the market if China will suffer a hard-landing scenario in an economic slowdown or not," Dr Prasarn said.

Mathee Supapongse, the senior director of the central bank's Domestic Economy Department, said Phue Thai's pledges to lift the minimum wage to 300 baht would not cause high inflation, if it was done gradually.

"However, the priority we want to see from the new government is to speed up investment in infrastructure so as to stimulate investment both from domestic sources and abroad. Low investment has remained a constraint in the economic development and economic growth potential," he said.

Currently, the minimum wage is reviewed annually by a tripartite committee of employers, labour representatives and civil servants, based on increases in the costs of various consumer products.

Ammorn Chaovalit, an academic adviser to the Labour Ministry, said the extent of the increase in the minimum wage in each province varies based on local inflation.

The academic subcommittee of the tripartite committee is scheduled to meet on Monday.

(Source: Bangkok Post, INFLATION, BoT chief repeats concerns, 7/07/2011, Parista Yuthamanop, link)

Economics Vocabulary

Bank of Thailand (BOT) - the central bank of Thailand (See website)

central bank
- "a national bank that provides financial and banking services for its country's government and commercial banking system, as well as implementing the government's monetary policy and issuing currency" (See Wikipedia and Google Definitions)

concerns - worries ความกังวล
ensure - to make certain that something happens or is done รับรอง ให้ความมั่นใจ ให้การยืนยัน รับรอง

inflation
- the level of prices rising in the economy as a whole ภาวะเงินเฟ้อ  (See Economist Glossary) อัตราเงินเฟ้อ
competitive - involving competition มีการแข่งขัน
regional trade partners - neighboring countries in ASEAN (Singapore, Malaysia, Vietnam, Cambodia, Burma, etc) that Thailand trades with (also competes with in some export markets)

purchasing power - the value of a country's currency measured by what you can buy with it ("The ability of consumers to acquire goods and services based on their possession of money and/or their recourse to credit. Aggregate purchasing power within a market or a national economy reflects total disposable income after taxes, and hence the level of employment") (See Wikipedia and Google Definitions)

key - important คนสำคัญ
range - the numbers between two numbers (example: inflation between 5% and 6%)

forecasts - what experts say will happen in the future คาดการณ์
economic growth - 1. the percentage change in GDP during a year; 2. over long periods of time a steady growth in the productive capacity of the economy (and so a growth of national income) that depends on investment (See Wikipedia and Google Definitions)

finance - to provide money for something จัดหาเงินทุนให้
finance minister - the minister in the Prime Minister's cabinet who is responsible for government finances, helps parliament form a government spending budget, collects taxes and borrows with bonds to finance government spending and then disburses the budget to government departments (See Wikipedia)

logic -
a way of thinking about some issue or problem and whether it is correct and reasonable (based on a set of assumptions and steps of reasoning) (See Wikipedia)
proposals - suggestions, ideas and plans on what to do in the future (discussed and revised before accepting proposal)
logic of proposals - whether suggestions are reasonable and correct

competitiveness
- how well a business can do compared to other firms in a market in terms of winning customers (does it have lower price or higher quality?) การแข่งขัน
undermine - to make weak, make someone become gradually less effective, confident, or successful บ่อนทำลาย ทำให้อ่อนลง,ทำลายทีละน้อย,ทำลายอย่างลับ ทำให้กร่อน

strengthening of the baht -
same as "baht currency appreciation"
currency appreciation - increase in the value of a country's currency relative to other countries (See Wikipedia)

election - the process of choosing a person or a group of person for a position, especially by voting elect (v) electoral (adj) synonym: the polls การเลือกตั้ง

stability
- a situation without sudden and unpredictable changes ความมีเสถียรภาพ ความมั่นคง
political stability - when there are no sudden unpredictable changes in politics (which make the business environment as well as decision-making difficult)

outright
- complete and total
majority - more than 50 percent of a group, more than half of the people in a group ส่วนมาก,  เสียงส่วนมาก, คนส่วนใหญ่, ส่วนใหญ่
outright parliamentary majority - complete majority (don't even need to form a coalition with other parties to get a majority)

optimism - a feeling that the future will be better, a feeling that good things will happen in the future มีทัศนคติที่ดี
parties - people or companies entering into a business arrangement or deal

maturity
(noun) - behaving like an adult or in a fully developed manner
mature (adjective) - being fully developed 
immature (adjective) - not being fully developed
political maturity -
having a fully developed political system
political immaturity
- not having a fully developed political system
immature in terms of domestic politics -
politics inside the country not fully developed ("foreign relations" and "international affairs" might be)

attitude - the way you think and feel about something, as shown in behaviour
X in terms of Y - X as measured by Y

domestic - within the country ภายในประเทศ
capital - money invested in a business (See glossary)
foreign capital inflows - investment money coming into the country from other countries
held underweight positions - (rich countries) holding less stocks, bonds and other investments than you would expect them to hold (given their size, wealth and importance in the global economy)

fiscal - connected with the government budget, i.e., public money เกี่ยวกับงบประมาณ
fiscal problems -
when the government starts borrowing too much to pay for government spending programs (interests start rising or their creditors refuse to loan to them anymore, creating a crisis)

unfolding
fiscal problems in the United States and Europe - developing fiscal problems in the US and Europe (currently happening right now, so people do not yet know what will happen, how events will play out)

funds
- money to be spent on something เงินทุน (here: investment money)
prospects - the possibility that things will happen, especially something good ความเป็นไปได้ (See glossary)
better growth prospects - when a country is more likely to grow faster economically than other countries (with incomes increasing at a faster rate also)

emerge - appear ปรากฏออกมา
risk - the possibility that something dangerous or unpleasant might happen ความเสี่ยง
emerge as a risk - before people thought it was safe, now people think it is dangerous

doubt
- not know for sure if something is true or false, uncertain
growing doubt - people thought something was true (but less and less as time goes by)

suffer
- to experience a bad event with some harm or damage (physical or mental pain)
scenario
- the way that a situation may develop in the future; a description of possible actions or events in the future
hard-landing
scenario - when there is a bad economic slowdown that turns into a recession (like a plane landing hard on the runway, some people might get hurt)

recession -
a general slowdown in economic and business activity: "Production, as measured by Gross Domestic Product (GDP), employment, investment spending, capacity utilization, household incomes, business profits, and inflation all fall during recessions, while bankruptcies and the unemployment rate rise. Recessions generally occur when there is a widespread drop in spending often following an adverse supply shock or the bursting of an economic bubble. Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply, increasing government spending and decreasing taxation"  (See Wikipedia)
pledge - promise

wage
- an amount of money that you earn for working, usually according to how many hours or days you work each week or month ค่าจ้าง
minimum wage - the smallest amount of money that companies can legally pay workers each day for their work (many may illegally pay lower than this)
lift the minimum wage
- increase the minimum wage  

priority - something important that must be done first สี่งที่สำคัญเป็นลำดับแรก something important that must be done first or needs more attention than anything else การให้ลำดับความสำคัญ สิ่งที่ได้รับความสนใจมากกว่า

investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate)
infrastructure - basic systems and services such as transportation, electricity, and water that are necessary for a country to run smoothly สาธารณูปโภค (See Google Definitions)

stimulate - act so as to increase activity กระตุ้น encourage activity, growth, and development (See glossary)
stimulate investment - encourage investment in the economy, take action to make businesses invest in the economy

constraint - something that limits or controls what you can do (See glossary)

development - the gradual growth and formation of something
economic development - the process of a country gradually building its economy until it is fully industrialized and most people are comfortable and middle class
economic growth
potential - the highest economic growth possible (with full employment)
potential - might happen in the future, what is possible, what could possibly happen ความเป็นไปได้ ที่มีศักยภาพ ที่เป็นไปได้

annually - happening every year ทุกๆปีด
tripartite - involving three organisations or countries ไตรภาคี
tripartite committee - a group of people who make decisions (with representatives from three different parts of society: management, labour and government)

employers
- companies that hire workers 
labour representatives - people from labour unions and other organizations who work for the benefit of workers in factories or for the government
civil servants -
government workers (who usually work their whole career for the government)

consumer - someone who buys and uses goods and services ผู้บริโภค
academic - someone who teaches at a college, or who studies as part of their job นักวิชาการ
extent - size ขนาด

local
- in or related to the area that you live, or to the particular area that you are talking about ท้องถิ่น
local inflation - inflation in the local area that you live such in a province or a town or city in a province (may not be the same as Bangkok)
scheduled - planned to happen at a particular time or day ตามตารางเวลา

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