Effective Communication Crucial - Bot

A short paper on the Bank of Thailand's website with the title "Effective communication crucial for monetary policy"

Starts off

"COMMUNICATION of monetary policy is vital to securing public understanding and credibility for policy actions. Credibility, in turn, determines the policy effectiveness as perceptions and expectations are self-fulfilling"

I have made a determined attempt to follow the reasoning and failed, and I haven't even had a beer yet.

And then it goes on

"Attempting to make complex policy interactions more easily understood, analogies have often been employed to explain monetary policy in simpler terms."

Aah, here we go, just what I need.

"the BOT governor highlighted the fact that the present supply shocks reduced Thailand's potential output and it was possible, as a result, for inflation to persist even when actual output growth is moderating. To clarify, she asked the audience to imagine a car

travelling at the 100kph speed limit on a highway, then turning into a local street where the speed limit is 60kph. "Even if the driver reduces the speed of the car to 75kph, a 25-per-cent reduction perhaps as a result of a narrower roadway, he can still be charged with speeding"

oh! well that explains it nicely, duh

Maybe something was gained or lost in the translation, or nobody is prepared to violate the "greng jai" to ask, "what the f^% does that mean?", allowing the boss to spout all manner of gibberish.

for another enlightening analogy

"Tarisa also compared the role of interest-rate increases to fend off inflation to an indirect cure for diabetes"

you can read the whole two sider here

http://www.bot.or.th/English/ResearchAndPu...cle05_08_08.pdf

I now need a beer, it generally helps.

For those interested, and I would definitely recommend having a beer near at hand, there is a whole bunch of fascinating documents on the website

http://www.bot.or.th/English/ResearchAndPu...ges/others.aspx