Thai finance minister sees room for easing ahead of central bank rate review 

THAILAND’S low inflation means there is room for an interest rate cut to boost economic growth and help weaken the baht to support exports, the finance minister said on Monday (Feb 24), ahead of a scheduled review of rates this week. Sixteen of 26 economists polled by Reuters predict the Bank of Thailand will leave the key rate unchanged at 2.25 per cent on Wednesday.

“If we reduce interest rates, it will help heat up the economy so this year we’ll be able to maintain the momentum of the economy,” Pichai Chunhavajira told reporters.

He added: “Our inflation has been consistently low so we can reduce interest rates because if inflation is low for a long time, it will affect producers as the price of goods is low.”

Annual headline inflation was 1.32 per cent in January, after averaging 0.4 per cent last year, well below the central bank’s target range of 1 to 3 per cent.

Pichai pledged more measures to help address the country’s stubborn household debt problem and urged banks to lend more and the central bank to be more flexible with loan-to-value rules to support the property sector.

He also said a weaker baht is important for export-driven Thailand, adding: “Every exporting country wants its currency to weaken.”

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The baht has risen 2.5 per cent against the US dollar since the start of the year

Pichai added that the issues of inflation, household debt, lending, the baht and rates had been discussed with the central bank.