BANGKOK- Thailand’s Finance Minister Pichai Chunhavajira on Wednesday pushed the government’s case for a cut in key interest rates ahead of a meeting with the central bank where the inflation target and the strong baht will be on the agenda.
The meeting, first reported by Reuters, follows months of government pressure on the Bank of Thailand to cut interest rates to boost the growth of an economy that has been struggling since the pandemic.
“Discussing the inflation target range will help align monetary and fiscal policies,” Pichai said, adding high rates worked against the government’s stimulus program.
The 1 percent to 3 percent inflation target range has been in place since 2020. Inflation has been below that range this year, and Pichai said a review could raise the chance of a rate cut.
In August, the central bank held key rates at 2.50 percent for a fifth straight meeting. The central bank has said the policy rate is at a neutral level and is not high by global standards. The next rate review is on Oct 16.
The strength of the baht, which has hit 30-month highs against the dollar, was affecting exporters and would also be discussed at the meeting, Pichai said.
Thailand’s government on Wednesday launched the first phase of its flagship $14 billion stimulus handout scheme, which will eventually see an estimated 45 million people receive 10,000 baht each, saying it would spark economic activity.
The initial phase will see 10,000 baht distributed in cash to 14.5 million welfare card holders and disabled people, and is expected to be complete by the end of the month.
“Cash will be put into the hands of Thais and create a tornado of spending,” Prime Minister Paetongtarn Shinawatra said at an event to mark the program’s start.
The “digital wallet” scheme was initially structured to distribute the funds through a smartphone app, with the money to be spent in local communities within six months.
“There will be more stimulus measures and we will move forward with the digital wallet policy,” said Paetongtarn.
The scheme has been criticized by economists, including two former central bank governors, as fiscally irresponsible. The government rejects that, but has struggled to find sources of funding.
Southeast Asia’s second-largest economy is expected to grow 2.6 percent this year after an expansion of 1.9 percent , behind regional peers.
