Thai Finance Minister to discuss inflation target with central bank soon
The government wants an inflation target that will push up consumer prices to help economic growth
THAILAND’S Finance Minister Pichai Chunhavajira said on Wednesday (Sep 18) he has set a date to meet with the central bank to discuss the inflation target, as the government pushes its case for a cut in interest rates.
The plan to push for the review was first reported by Reuters and follows months of government pressure on the Bank of Thailand (BOT) to cut the rate from a decade-high 2.50 per cent to help boost growth of an economy that has been struggling since the pandemic.
Thailand’s annual headline inflation slowed in August with the consumer price index (CPI) rising 0.35 per cent year-on-year after July’s annual increase of 0.83 per cent, and was below the target range of 1 per cent to 3 per cent.
“We will have discussion soon, quietly,” Pichai told reporters, but did not give a date. He said he would like to see an inflation target that will push up consumer prices to help economic growth.
“It can be a range or a mid-point,” he said without elaborating.
The government and central bank agree on an inflation target each year. The BOT has said the current range, which has been in place since 2020, was suitable.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Public-debt-to GDP by the end of September next year, which is the end of 2025 fiscal year, is expected to come in at 66 per cent, assuming 3 per cent economic growth, Pichai said, under the 70 per cent ceiling. The level was 63.7 per cent at the end of July.
Thailand plans to borrow from abroad, issuing dollar-denominated bonds next year, he added.
South-east Asia’s second-largest economy is expected to grow 2.7 per cent this year from an expansion of 1.9 per cent last year, behind regional peers.
In August, the BOT held rates at 2.50 per cent for a fifth straight meeting, resisting government pressure for a cut and saying that rates alone could not spur growth, which was being held back by structural problems.
“Our interest rates should align with global rates,” Pichai said.
The next rate review is on Oct 16.
Prime Minister Paetongtarn Shinawatra, who became premier last month, has called central bank independence an ‘obstacle’ to growth.
Her government plans to nominate party loyalist and former finance minister Kittiratt Na Ranong, a staunch critic of the BOT, as the next BOT board chairman, sources told Reuters.
The BOT chair cannot direct rates, but plays a role in choosing the rate review panel and the next governor after incumbent Sethaput Suthiwartnarueput’s term ends in September 2025. REUTERS
Share with us your feedback on BT's products and services
