Vol 5 No 1 (2018)

Monetary Policy Rule and its Performance under Inflation Targeting in Thailand

Hiroyuki Taguchi
Saitama University
Mesa Wanasilp
Saitama University
275 Views | 332 Downloads
  • Monetary policy rule,
  • Inflation targeting,
  • The Bank of Thailand.


This article reviews the Thailand monetary policy rule and its performance under the adoption of inflation targeting regime since 2000. The study estimates the policy reaction function to see if the inflation targeting has been linked with an inflation-responsive monetary policy rule, and investigates whether the monetary policy rule would actually have its transmission effect on inflation, through tracing the impulse responses of inflation rate to monetary policy shocks. The main findings are as follows. The estimation outcomes of the policy reaction function show that the Thailand monetary policy rule is characterized as an inflation- and exchange-rate- responsive rule with forward-looking manner, which is countercyclical against inflation in the long run, but is accompanied with slow adjustment toward a target policy rate. The impulse response analyses imply that the Thailand monetary policy has only a marginal transmission effect on inflation probably due to the slow adjustment of policy rate.


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