By Kitiphong Thaichareon and Orathai Sriring
BANGKOK- The lower end of the Bank of Thailand’s 1 percent to 3 percent target range for headline inflation is too low, a deputy finance minister said on Thursday, adding a new target could help lift both inflation and economic growth.
The government wants to review the inflation target, which has been in place since 2020, saying a change should raise the chance of a rate cut to help revive Southeast Asia’s second-largest economy.
PaopoomRojanasakul said he wanted to make the central bank more accountable for inflation running below target, and wanted to start talks on the new inflation target as soon as possible.
“I think inflation at 1 percent is too low, and low inflation will make the economy stagnant as there is no production and consumption,” he told reporters.
“We hope the adjustment of the inflation target will make monetary policy play a greater role in lifting inflation from plus-minus 1 percent to help the economy move forward,” he added.
The government has been at loggerheads with the central bank for months over interest rates, with Prime Minister SretthaThavisin calling for a rate cut to help the public and the economy, which has lagged regional peers.
Despite the calls for an easing, the central bank held the key rate steady at 2.50 percent this month, saying it was consistent with the growth and inflation outlook.
The next rate review is on Aug. 21.
The central bank has said the current inflation target range is functioning well and that headline inflation is expected to be below the target range in the third quarter before returning to the range in the fourth quarter.
The annual headline inflation rate was 1.54 percent in May after running below the target range for a year.
Paopoom said the government is considering whether a new inflation target would be a range or a mid-point. – Reuters
