Public investment in infrastructure, as a source of potential growth, has been put on hold. I do hope that the political instability will not drag on for a long time and that an acceptable solution will be reached among all stakeholders in society soon. Monetary policy Ladies and Gentlemen, let me turn to my last subject, that of monetary policy. 8. The MPC’s ultimate mandate is to safeguard the macroeconomic and financial stability of the country. In the last few years, the Bank of Thailand has maintained an accommodative monetary policy stance. Mindful of imminent downside risks to growth, the policy rate was cut three times in the MPC meetings of May and November 2013, and again in March 2014. In these three meetings, the MPC were of the view that the reductions of policy interest rate were necessary to ensure sufficient support to the domestic economy. The current real policy interest rate, which is now in a negative territory, aims to help alleviate the financial burden on households and corporations, allowing them to withstand short-term shocks. 9. However, as the current policy interest rate is already low, further easing would not be without concerns. In the last meeting in April 2014, the MPC decided to maintain the policy at 2.00 percent. The rationales behind this decision were that the current monetary policy stance was accommodative enough to support the economy as the prolonged political uncertainties were the main cause for risk to growth, not the financial conditions.
Ladies and Gentlemen, looking at the more medium-term prospects, I am convinced that the underlying fundamentals that have been attracting international investors to Thailand over the years are still in place. The country’s overall macroeconomic fundamentals remain  BIS central bankers’ speeches  1  sound against the back-drop of a healthy banking system, low and well-anchored inflation, and the government’s relatively strong financial position. A flexible exchange rate and our strong position in terms of international reserves provide ample cushioning for the central bank to be able to manage capital flow volatility. These solid fundamentals command trust from investors and credit rating agencies. Recently, Moody reaffirmed Thailand’s stable credit outlook citing that “in many respects, Thailand’s credit metrics remain well positioned compared with its immediate rating peers”. 6. Having said this, we cannot take things for granted. In fact, many problems point toward a need for structural reform. The MPC, in its last meeting, expressed concern over a number of structural issues, which, if not addressed, could restrain the country’s potential growth in the long run. These problems include fiscal sustainability, inequality in terms of both income distribution and access to education and health care, as well as supply bottlenecks such as a labor shortage. These problems cannot be solved by monetary policy, but require a concerted effort from all stakeholders. 7. In addition, as we are all aware, the prospect of the Thai economy is largely clouded by political uncertainty, which continues to impair the ability of the government to steer the economy forward.