Thai PM says setting new inflation target range should increase rate cut chance
AN UPCOMING review of Thailand’s inflation target range by the central bank and finance ministry should increase the chance of a rate cut, Thai Prime Minister Srettha Thavisin said on Thursday (Jun 13).
The central bank left its key interest rate unchanged at 2.5 per cent for a fourth straight meeting on Wednesday, despite calls by the government to reduce borrowing costs to help revive South-east Asia’s second-largest economy.
The current inflation target range is 1 to 3 per cent, which has been adopted since 2020. The inflation target is reviewed every year.
“Setting a new range for inflation may give flexibility in reducing interest rates, (making a cut) more possible,” Srettha told reporters.
Last month, Finance Minister Pichai Chunhavajira said he would meet the central bank chief to review the inflation target which would lead to appropriate interest rate settings.
Srettha has said the current policy rate of 2.5 per cent is hurting the economy and the public, and it should be cut. The central bank said on Wednesday the rate was “neutral and not too high”.
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“I’ve said several times. I don’t want to say any more as there will be conflict,” Srettha said on Thursday, adding he would also try other measures to boost activity, including accelerating budget spending.
Thailand’s average headline inflation rate was -0.13 per cent in the January-to-May period, and the central bank has forecast it would be 0.6 per cent for the whole year.
The central bank said the current inflation target range was still in line with economic fundamentals and anchored medium-term inflation expectations.
SEE ALSO
The economy grew 1.5 per cent in the first quarter from a year earlier, slowing from 1.7 per cent growth in the prior quarter, lagging regional peers.
The government has forecast economic growth of 2.5 per cent this year, after last year’s 1.9 per cent expansion. REUTERS
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