Veerathai Santiprabhob: Monetary policy challenges during the Great Transition - perspectives from an emerging market central bank
Speech by Dr Veerathai Santiprabhob, Governor of the Bank of Thailand, at the Official Monetary and Financial Institutions Forum (OMFIF), London, 10 January 2017.
Ladies and Gentlemen,
It is a great pleasure for me to be here in London and to have a chance to contribute to the City Lecture series. Firstly, I hope it is not too late to wish you all a happy and prosperous new year. Secondly, I would like to thank OMFIF for the invitation and also express my appreciation of the work that OMFIF has done in providing a vibrant and informative platform for policymakers to exchange their views on issues relevant to the future of the international monetary and financial system. Given the economic and political challenges that we face today, I feel that the need and importance of such platforms for open dialogue is as important as ever. For it is only through constructive dialogue that the diversity of perspectives inherent in modern society can be harnessed to drive meaningful progress.
In that spirit, I would like today to reflect on the prevailing monetary policy paradigms that have guided central bank actions over the recent past and highlight some of the tensions and limits of such framework. In policy, we are often preoccupied with the technical and tactical management of our instruments. Most of our energy is devoted to analyzing latest economic developments and deciding on the size and timing of our actions. Yet over time, if one gets the paradigm right but the details wrong, the damage will be largely limited. Moving the policy instruments slightly too much or too little or a few months too soon or too late won't matter very much in the long term. But if we get the paradigm wrong, the resulting harm will be severe because we will make the same mistakes over and over again. Questioning prevailing paradigms now and then is therefore healthy.