The MPC, thus, lowered the 1-day repurchase rate, the policy rate, to 4.75 on 17 January meeting and a further 25 basis points reduction on 28 February and expect to pursue a downward path of interest rate in a cautious manner. This accommodative monetary policy stance will help stimulate domestic demand by supporting economic sentiments, cutting down financial costs and preparing the stage for private investment recovery once confidence has returned, most likely in the 2nd half of this year. Having considered the recent economic conditions and monetary policy, we will now turn to the prospects and challenges of the Thai economy as we move forward, and how we are going to deal with them. Ladies and gentlemen, for this year, we expect the economy to continue facing a number of important challenges both internally and externally. Internally, political uncertainties, which have adversely affected private sector's decision to invest, are likely to stay until the next general election. Externally, the threat of an impending global imbalance remains high, while the global economy is expected to slow down. Moreover, the risk from volatile global financial markets lingers, while the baht could continue to appreciate against the US dollar. It may be a great concern to you whether the Thai economy will be resilient enough to withstand such an adverse environment. However, we believe that sound fundamentals and the appropriate policy stance would prepare the economy well in the long term. Facing internal challenges, the monetary policy stance has become more accommodative as mentioned earlier.
Tarisa Watanagase: The prospects of the Thai economy and monetary policy Speech by Dr Tarisa Watanagase, Governor of the Bank of Thailand, at the Japanese Chamber of Commerce (Bangkok) Dinner Talk, Bangkok, 16 March 2007. *  *  *  President Banno, fellow bankers, distinguished business leaders, ladies and gentlemen, good evening. "First of all, I would like to thank the Japanese Chamber of Commerce (JCC) for inviting me to speak at this dinner." Japan's relationship with Thailand has a long history and encompasses many aspects – as a trading partner, investor and major contributor to Thailand's economic development. Japan is ranked as Thailand's number one trading partner and investor. In 2006, Japan contributed 16.3 percent to Thailand's total trade, while net foreign direct investment (FDI) from Japan constituted 32.6 percent of Thailand's total net FDI inflows. It is therefore my pleasure to be here and share my views on the Thai economy – the outlook and challenges, as well as our monetary policy, with all of you. I would like to structure my talk to cover three key areas. First, I will touch briefly on the overall condition of the economy. Secondly, and in relation to the first one, I will elaborate on recent monetary policy decisions. Finally, before concluding, I will share my views on the prospects and challenges facing the Thai economy. Let me begin with the economy. The past year was one of the more challenging times for Thailand, in terms of both political and economic aspects.