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Thailand Monetary Policies
Monetary policy was traditionally passive. Control over the
rate of credit extension was the primary means for supporting
growth, maintaining price stability, and monitoring the balance
of payments. Interest rates were allowed to adjust to the rate of
credit expansion and were very much affected by international
rates as a result of the Thai open economy. Low returns tended to
discourage private savings and encourage high demand for consumer
goods.
Domestic prices also were largely determined by world price
movements as a result of the country's open economy and minimal
domestic price controls. In fact the oil price increases in the
early 1970s caused inflation to rise from 4.8 percent in 1972 to
24.3 percent in 1974. The deceleration of world prices in the
early 1980s caused domestic inflation to decline from 13 percent
in 1981 to 5 percent in 1982. Measuring by the price indexes,
with 1972 as a base of 100, price increase was less for
agricultural products, going from 130.2 in 1973 to 227.7 in 1983
compared with 115.7 to 276.3 for nonagricultural products. The
highest increase among agricultural goods was for forest
products, which went from 122.9 to 403.2 during the same period.
Among nonagricultural goods, mining and quarrying showed the
highest increases. The consumer price index, taking 1976 as the
base of 100, showed the highest increase in transportation prices
with 231.2 in 1982, while the rest of the consumption basket had
an increase of about 180 between 1976 and 1982. The Bangkok
metropolitan area had the highest increase with 194 in 1983,
compared with 188.4 for the Northeast region, 181.6 for the
Center, 180 for the North, and 178.4 for the South (these being
Thailand's four geographic regions).
Data as of September 1987
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