In conducting monetary policy under the inflation-targeting framework, the monetary policy stance is signaled through the policy interest rate.  (The 14-day RP rate was used at the policy interest policy interest rate up until 16 January 2007, after which the policy interest rate was switched to the 1-day RP rate).  Since 12 February 2008, with the closure of the BOT-run RP market, this was switched to the 1-day bilateral PR rate.

The Bank of Thailand will conduct transactions at a fixed rate at the policy interest rate in its morning bilateral repurchase round (financial institutions submit a bid for the amount they wish to borrow or invest).  If the BOT engages in other longer-term operations, they will be conducted via variable-rate tenders, (financial institutions submit bids, specifying both price and quantity for the amount the wish to borrow or invest), allowing term-interest rates to better reflect market conditions and expectations.  However, to ensure that no fixed-rate operations span the MPC meetings, the BOT will avoid conducting 1-day bilateral repurchase operations on the day of the MPC meeting, given that the MPC’s interest rate decisions are announced in the afternoon.