Thai Prime Minister Srettha Thavisin indicated on Thursday that an upcoming review of Thailand’s inflation target range by the central bank and finance ministry could enhance the likelihood of a rate cut.
Despite calls from the government to lower borrowing costs to stimulate the country’s economy, the central bank maintained its key interest rate for the fourth consecutive meeting on Wednesday.
The existing inflation target range of 1% to 3%, implemented since 2020, is subject to an annual review. Srettha highlighted that establishing a new inflation range may provide more flexibility in reducing interest rates, as stated during a press briefing.
Last month, Finance Minister Pichai Chunhavajira announced plans to confer with the central bank governor to reassess the inflation target range, aiming to determine appropriate interest rate adjustments.
With the average headline inflation rate recorded at -0.13% from January to May, and an estimated 0.6% for the entire year according to the central bank, discussions on the inflation target range are gaining significance.
Nonetheless, the central bank affirmed on Wednesday that the current inflation target range aligns with economic fundamentals and continues to sustain medium-term inflation expectations.
As of now, no specific date has been set for the deliberations regarding the impending review of the inflation target, which will involve discussions between the Bank of Thailand and the Finance Ministry.
