The more recent criticism has been that the ECB has been slow to respond to the weakening of the US economy. Implicit in that criticism is no doubt a judgement about the extent and duration of the US slowdown and its likely impact on the euro area. As I have said there is a great deal of uncertainty about that. But the ECB has to take account, too, of domestic demand pressures in the euro area, and of the fact that even on the core measure Euro area inflation has been moving up gradually towards the top of the ECB's 0-2% range. Frankly I don't see how anyone can be confident whether the ECB has it precisely right or wrong – it is perfectly normal for even the best-informed people to disagree on  BIS Review 36/2001  3  these judgements, as anyone who reads our own Monetary Policy Committee meeting minutes will tell you. But I am wholly confident that the ECB is sensitive to the issues surrounding those judgements, including the downside risks in the US. So, too, are we in the United Kingdom. In our case, we again enjoyed relatively steady overall economic growth last year combined with a further fall in unemployment to its lowest rate for 25 years. Inflation meanwhile continued to run somewhat below the Government's 2½% target, partly at least as a result of the dampening effect of sterling's surprisingly persistent strength against the euro.
Domestic demands have been helped not only by direct government spending, but also by other government schemes that injected funds directly to the grass roots. We had the Bht 74 billion village fund (approx $ 1.7 billion) whereby each village had been allocated Bht one million to on lend to village members, often under group mutual guarantees. We also had the micro loan scheme organised by the Government Savings Bank, the government owned bank, which lend directly to the poor. Ladies and gentlemen, The good news went on. Despite the strong recovery, we have been able to keep inflation under check. Headline inflation for 2002 was 0.7% and core inflation 0.4%. The adverse affect from high oil prices has not translated into much inflation. BIS Review 8/2003  1  Our currency was also quite stable. For the whole of 2002, the bath appreciated against the US dollar by less than 2%, which was quite modest compared to other Asian currencies. The international reserves level was also ample at $ 38.9 billion, allowing us to aim to pay back all the loans under the IMF program by the end of July this year. Moreover, three major credit rating agencies, S&P, Moody’s, and Fitch Ratings, all assigned better outlook to the Thai economy. Japan Credit Rating Agency did in fact upgrade Thailand’s sovereign rating from BBB to BBB+ last November. Such widespread improvement in confidence among consumers, entrepreneurs, and investors helped support both consumption and investment throughout the year.