Thailand's Inflation Target Discussion

BANGKOK (Reuters) – Thailand's finance minister stated that the inflation target should be lifted above 1%. This announcement came ahead of a meeting with the central bank aimed at discussing a new target.

Finance Minister Pichai Chunhavajira and Bank of Thailand (BOT) Governor Sethaput Suthiwartnarueput, along with officials, convened to evaluate the inflation target. The government is advocating for an increase in the inflation goal from the current range of 1% to 3% in an effort to stimulate the sluggish economy. In contrast, the central bank believes the existing target, established in 2020, has been effective in supporting economic stability.

Before the meeting, Pichai acknowledged that inflation was unlikely to meet the target this year, revealing that the average annual headline inflation was just 0.20% during the first nine months of 2024. "Inflation that is less than 1% is really too low," he remarked, expressing hope for a swift resolution.

He added, "If it is not finished today, at least there must be a guideline."

In a related development, the BOT recently surprised the market by cutting its key interest rate by 25 basis points to 2.25%—the first reduction since October 2020. The government has continuously advocated for rate cuts throughout the year, suggesting that high rates have hindered economic activity. The central bank countered that underlying structural challenges are impacting growth.