On Tuesday, Thailand’s Finance Minister Pichai Chunhavajira expressed the need for the country’s inflation target to be revised upwards to surpass 1%. The statement was made ahead of a crucial meeting between the minister and the central bank governor, Sethaput Suthiwartnarueput, with both parties aiming to finalize a new inflation target range.
Meanwhile, as the government advocates for an inflation goal higher than the current 1% to 3% range to stimulate the sluggish economy, the central bank contends that the existing target, set since 2020, has been effective for the economy.
Deputy Finance Minister Paopoom Rojanasakul emphasized that inflation is too low and called for an elevated target range.
In the first nine months of the year, the average annual headline inflation stood at a mere 0.20%, significantly below the target range. In a surprising move earlier this month, the BOT slashed its key interest rate by 25 basis points to 2.25%, marking the first reduction since October 2020.
The government’s persistent call for a rate cut throughout the year was based on the belief that interest rates were hindering economic activity, whereas the central bank attributed the sluggish growth to underlying structural issues.
During a recent lengthy meeting between Pichai and Sethaput, discussions primarily revolved around debt and liquidity concerns.
