Thai Officials Discuss Raising Inflation Target to Revitalize the Economy

A discussion is taking place between the government and the central bank of Thailand regarding the country’s inflation target. Deputy Finance Minister Paopoom Rojanasakul has expressed concerns that Thailand's inflation is too low and advocates for a higher target range. The current target, set between 1% and 3% since 2020, is deemed insufficient by the government to stimulate the economy, which is experiencing slow growth.

Finance Minister Pichai Chunhavajira and Bank of Thailand (BOT) Governor Sethaput Suthiwartnarueput are scheduled to meet today to discuss a possible adjustment of the inflation target. This meeting follows earlier discussions held this month, where the two officials addressed issues related to debt and liquidity.

Statistics for the January to September period indicate that the average annual headline inflation rate stands at 0.20%, significantly below the target range. This discrepancy has become a point of contention for the government and has led to calls for a revised, higher inflation target.

In early October, the BOT made an unexpected move by cutting the benchmark interest rate by 25 basis points to 2.25%, marking the first reduction since October 2020. The government had argued that high interest rates were hindering economic activity and called for rate cuts throughout the year. However, the central bank countered this view, stating that the primary obstacles to growth stem from structural issues.

The meeting between the Ministry of Finance and the BOT today is expected to further address these economic challenges and potentially lead to a new consensus on an appropriate inflation target for Thailand.