BANGKOK- Thailand’s current inflation target range of 1 percent to 3 percent has “served pretty well” and should not be changed, a deputy central bank governor told Reuters on Thursday, as the government pushes for a higher price target to boost economic activity.
Inflation is low and well anchored, and there is no risk of deflation, while the economy is converging to trend growth, Bank of Thailand (BOT) Deputy Governor Piti Disyatat said in an interview.
He said he was hoping for a constructive discussion on the inflation target for 2025 when the central bank and finance ministry meet next Tuesday.
“Hopefully, we have a good, constructive discussion and we will agree,” he said.
“We don’t see any clear reasons right now to really change it”.
Piti reiterated that last week’s surprise interest rate cut was a recalibration, not the start of an easing cycle.
The central bank is aiming for a neutral stance, and policy could be adjusted if the macroeconomic picture changes significantly, Piti said.
After months of withstanding political pressure and public bickering, Thailand’s central bank last week delivered what the country’s government had been pressing for: it cut its key interest rate, the first reduction since 2020.
Now comes the hard part for Prime Minister Paetongtarn Shinawatra, an untested leader whose ruling Pheu Thai party has struggled to fire up the economy since it took office last year and placed its bets on a major cash handout programme.
Having lost the BOT as a whipping boy, it is up to Paetongtarn’s government to deliver the goods – but the odds appear stacked against it.
Bogged down by massive household debt, lacklustre consumer spending and plummeting industrial sentiment, Southeast Asia’s second-largest economy faces an extended period of headwinds after growing 2.3 percent year-on-year in the second quarter, analysts said.
The Bank of Thailand (BOT) itself cut its 2025 GDP growth projection to 2.9 percent from its earlier forecast of 3 percent, although the economy was expected to grow 2.7 percent this year, higher than the 2.6 percent it had previously forecast but lagging its Asian peers.
The central bank also emphasised that Wednesday’s 25-basis-point rate cut wasn’t the start of an easing cycle, describing it as a “recalibration” that was not triggered by political pressure.
Key growth engines of the Thai economy, including the critical automobile industry, are sputtering and the country of 66 million people is seeing a wave of factory closures that is upending its manufacturing sector.
In September, Thailand’s industrial sentiment index hit a 27 month-low due to soft domestic demand, floods that ravaged the country’s north and a strong baht currency.
