Thailand’s Finance Minister, Pichai Chunhavajira, announced plans on Wednesday to meet with the central bank to discuss revising the inflation target, as the government advocates for a reduction in interest rates.
This initiative, as reported by Reuters, comes after months of the government urging the Bank of Thailand (BOT) to lower the rate from its decade-high of 2.50% to stimulate economic growth amidst the pandemic-induced struggles.
Headline inflation in Thailand decelerated in August, with the consumer price index (CPI) registering a 0.35% year-on-year increase, following July’s 0.83% rise, falling below the targeted range of 1% to 3%.
Pichai expressed the need for an inflation target that would drive consumer prices up to support economic expansion, proposing a range or midpoint without further details.
The government and central bank typically agree on an annual inflation target. While the BOT has deemed the current range, established since 2020, as appropriate, Minister Pichai aims to reevaluate it.
He also disclosed that Thailand’s public debt-to-GDP ratio is anticipated to reach 66% by the end of September 2025, staying below the 70% threshold, with plans to issue dollar-denominated bonds next year.
Thailand is forecasted to grow by 2.7% this year, up from 1.9% in the previous year, trailing regional peers.
Despite persistent government calls for a rate cut, the BOT maintained the rate at 2.50% in August, emphasizing that structural issues were constraining growth, while Minister Pichai emphasized that aligning interest rates with global trends was crucial. The upcoming rate review is scheduled for October 16.
