The Bank of Thailand pursues three goals with its monetary policy: medium-term price stability, sustainable economic growth, and financial stability.
Monetary policy has an impact on both the economy and the price of goods and services. A change in the price of products and services is called an inflation rate. An inflation rate that is neither too high nor too low would promote the economic well-being in the long-term. Thus, the Bank of Thailand uses a flexible inflation targeting framework to keep the inflation rate at an appropriate level while promoting full-potential economic growth and a stable financial system.
Because all policies are interconnected, the Bank of Thailand uses a variety of policy tools to achieve its three objectives under the flexible inflation targeting framework, including monetary policy, financial policy, macroprudential policy, exchange rate policy, and capital flow policy. This is called an “integrated policy framework.” Thailand now uses a managed float exchange rate regime. Under this regime, the market mechanism determines the value of the Thai baht and the Bank of Thailand could intervene in case the currency becomes excessively volatile.