You talked about how you'll be gradual in your approach in terms of rate rises. That essentially means if you need to pause your
pause in each race 50 you do that as well. Give us a sense of the conditions needed for those two scenarios. First it's
gradual and measured but gradual meaning that we don't see the need to undertake aggressive rate hikes at each meeting. Because
the economic circumstance the conditions in Thailand are different from those in the industrial countries. Measured means
will calibrate our response to the economic conditions. So we'll be data driven. And so if we see economic conditions warrant
that we pause we will pause to see that it warrants a larger hike. Say a 50 basis point hike we will do so. Data driven
inflation still hanging at 14 year highs. And we have a Fed who may move 75. Some say you're behind the curve. You say you're
not. Why not. Right. Let me address that behind the curve point first because I think that it gets a lot of I think unfair and
unwarranted attention. First off we're in a very different part of the economic cycle compared to other countries. So
the recovery has lagged growth of other countries. If you look at the countries that hiked all the other countries that hike
hiked when they had their level of GDP economic to be reached they're pretty close at levels of all these countries. Really
only one the only country that start hiking before we reach pre Covid levels. We don't anticipate for us getting back to pre
over it until probably end of this year beginning of next year. So in that sense it kind of shows you that we're not behind the
curve in the sense you might be ahead of the curve compared to our peers. And that reflects again the fact that the economic
conditions that recovery is a bit slower in other places. The other thing that that argues for a more gradual measured
approach is in nature inflation hasn't actually right to level. You know the headline number of inflation is very high. It's
uncomfortably high 7 plus percent in our target range of 1 to 3 percent. But I think it's important to get kind of underneath
the numbers and look at the nature of inflation. And the first thing that we see is that it's almost all actually not. It's all
supply side driven mostly the food and energy space. We don't see any signs of demand side inflationary pressures. So it's
very different from again the context in the US and UK of those other countries. And we also see that there is a relatively low
chance in Thailand for reasons we can discuss if you'd like of there being a wage price spiral in Thailand. And if you look at
the trajectory that we have for headline inflation we see headline inflation. Yes. Remained elevated now peaking probably
sometime in Q3 and then gradually coming back in the target range perhaps by the middle of next year. There are lots of
uncertainties still out there. And you only have two meetings left to the. Yeah.
The question really is is it logical for you to move 25 for the next two meetings given where inflation is right now. We will be
measured and calibrated. If it looks like we need to do more we will do more of it. Looks like we need to pause a little falls.
But again in the overall context if you look at where we are the economic conditions the structural features as it stands now
twenty five for the next two meetings it prudent for me to comment or prejudge what the MDC is going to
do. I'll go back and say that are based on expectations guiding our policy normalization. It will be gradual and measured.
Governor I mean it's interesting you say that you're not seeing any demand side inflation and it's all from the supply side. You
know you can do a lot about supply side inflation. So you know one part of my question is why move the tool. The second part
would be is it really about the currency than anything else. And also preemptive changes to the structure of inflation that in
Thailand by currency. You mean like exchange rate pastor in terms
headline inflation. Oh I'll take that. That's the question. If you look actually in Thailand the effect of exchange rates on
headline inflation has traditionally been very very low. Past episodes each one percentage point and appreciate the
exchange rate results in ballpark about six or seven basis point hike in headline inflation. So exchange rate pass through effect
on headline inflation in Thailand is very very low. It's a very different context again from say some of the Latin American
countries and you see much higher impact of the exchange rate on inflation. I'm afraid I missed the first part of your question
and got a bit garbled to run that by me. Okay. Did I what I was asking was whether it was prudent to be raising
rates when you see new evidence of demand side inflation and there's nothing really you can do with monetary policy with
regards to the other side of the equation which is supply side price rises.
Right. Right. I mean that's again the reason that we feel that a measured and gradual a gradual approach is appropriate because
the source of the inflation is supply side stuff which raising rates doesn't do a whole lot in terms of what happens with
energy prices. So until we see you again you know clearer signs of demand side inflationary pressure or we see signs of perhaps
an incipient wage price spiral happening then we're happy to continue with a gradual and measured approach whatever. Again if
the circumstances change and it warrants a more active approach more aggressive approach. We are ready to do so. So you say
what's needed to contain inflation. What are you prepared to do. What are the policy options. What are the key ones for you to
contain inflation. Oh like any central bank the main instrument we have is the interest rates. But again the interest rate works
through channels usually hitting on interest rate sensitive sectors things like housing and whatnot. Right. But those aren't
the things in Thailand that are driving the headline inflation. So again that accounts again for why we feel more a more a more
measured approach is appropriate relative to the circumstances you see in the other countries which has recovered significantly
from its weakness. I mean now some say that perhaps it is overvalued by about 3 percent.
What's your take on that and what's fair value for the currency. Given the fundamentals given the fundamentals that we're seeing
right now. My take on that is very simple. Has learned it's that it shows you that the movements of the body like with many other
Asian currencies is driven first and foremost by what happens with the dollar. Right. You know people were talking about how
oh you know there's this huge interest rate differential between Thailand and the U.S. that's causing capital outflows and
causing the bar to depreciate. That has. But at this level is the board reflecting the fundamentals of the country. This is an
economy that's growing at the weakest level in all of Southeast Asia. When tried to Covid it was among the fastest growing are
we have a managed floating exchange rate regime system in place. So we don't have a predetermined target level for the. We just
want the board to move in line with market forces. The only way that we do the managed part of that floating equation is that we
don't like the movements that occur too rapidly. Because obviously the real economy in particular Hang Seng sectors need
time to adjust. The optimism on the recovery of the economy hinges a lot on tourism which accounts for almost 50 percent of
GDP. A lot of that depends on China and Chinese tourists coming back
to the country because it accounts for 30 percent of GDP. I'm just wondering how realistic is that. Given that China
continues to observe its Covid policy there is risk to the course projection. So there's no question that our economic
recovery is tied so much in the recovery in tourism. And as you mentioned tourism accounts for about 12 percent of GDP 20
percent of employment. And China traditionally was a big part of that. A third of workers who came from China. That said we don't
expect us to get back to the pre Covid. That was a 40 million tourist anytime soon to get to that level. We would expect a lot
of Chinese tourists to come in. But we're operating off such a low base of limbo. Right. That you know we went from 40 million
tourists pretty Covid to 400000 last year. You know this year year to date we've seen three point two million full year. This
year we expect something north of 8 million. So that's still a ways to go. And then we're fairly confident we can get the 8
million figure even without a significant opening up. I see that the risk is the downside though. This is an economy dependent on
exports depending on tourism. And of course we're seeing the situation in Europe. A recession is coming. We could see the
same in the U.S. Surely talent would be impacted. There are a lot of risks out there but I would argue that already our
recovery is fairly resilient because we're depending a lot on for the tourism uptick provided provided there's no like new
monster variant that comes out and prevents the recovery in tourism happening.
We feel that the recovery in tourism is operating off such a low base that we'll see some tourists come. And traditionally we see
that even if when the economy is not doing too well the tourists still come on a bilateral basis to see that. So like the source
countries the economy's not doing it the tourist or partly flex that you know very cost effective good value for money
destinations. So people still from. And so we we expect again I mean eight billion off compared to what we used to get 40
million. This is still a long ways. And so we're fairly comfortable that we can reach that level. E.M. currencies like
the board are susceptible to movements in the dollar. Do you see the king dollar the strength in the dollar the system. Yeah.
Hard to say. If you were to hazard a guess how do you see the dollar moving. If you ask me about the balance of risks now
going forward probably more towards. Having reached close to its peak and the upside of dollars buy
less well if not on the downside of the dollar. I think once the narrative in the United States changes when people start to see
maybe inflation hitting a peak at what not sentiment will change then the dollar will adjust accordingly. How closely are you
watching Jackson hold expectations that the Fed will remain hawkish may move seventy five. How closely are you watching.
Obviously very closely as I mentioned because the main thing that has been driving the board has been the movements in the
dollar and the Fed's tone hawkish sentiment and outlook on inflation and GDP. Our major drivers of that. And as you
mentioned we're a small open economy. Some movements exchange rate hit us a lot. Do you see Paul moving 75 in September. Is
there a case for him to move to be that aggressive as a serving governor who sits here watching very closely. I have had enough
trouble getting my own forecast here. Right. Much less the U.S. I'll leave that question for others. Okay. Just one final
question. Digital currency of course the CDC you'll be testing the CDC later this year. And I'm wondering how you expect that
to play out. Yeah we've been operating or doing experiments in the CBD space for quite some time in particular starting with
the wholesale CBD space where it actually has led. I think there's much more potential in the near term on the wholesale
space. I know the retail space CBD gets a lot more attention but I think that probably is a ways off. We'll be doing a limited
scale pilot end of this year running for about six months
to learn it's a pilot to learn not necessarily a pilot to launch. So we want to understand the technology all the
different kind of business and policy implications involved around that. But I have to say that you know we're not in a
pressure on any real pressure to quickly launch a retail CVC. Part of the reason because our existing payment system Pompei
Fast payment system works really quite well. So there is a pressing need to put in place this new infrastructure to do to
address it. Winds might you launch. I think like any central bank if you ask them with the exception
again of China which is rolling out a large scale pilot in three years I would be surprised to see any major central bank launch
retail BDC within the next five years.