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Thai PM says setting new inflation target range should increase rate cut chance

By Thomson Reuters Jun 13, 2024 | 2:41 AM

BANGKOK (Reuters) – An upcoming review of Thailand’s inflation target range by the central bank and finance ministry should increase the chance of a rate cut, Thai Prime Minister Srettha Thavisin said on Thursday.

The central bank left its key interest rate unchanged for a fourth straight meeting on Wednesday, despite calls by the government to reduce borrowing costs to help revive Southeast Asia’s second-largest economy.

The current inflation target range is 1% to 3%, which has been adopted since 2020. The inflation target is reviewed every year.

“Setting a new range for inflation may give more flexibility in reducing interest rates,” Srettha told reporters.

Last month, Finance Minister Pichai Chunhavajira said he would meet the central bank chief to review the inflation target range, which would lead to appropriate interest rate settings.

The average headline inflation rate was -0.13% in the January-May period, and the central bank has forecast it would be 0.6% for the whole year.

However, the central bank said on Wednesday the current inflation target range was still in line with economic fundamentals and still anchored medium-term inflation expectations.

(Reporting by Panarat Thepgumpanat and Orathai Sriring, Writing by Devjyot Ghoshal; Editing by John Mair, Ed Davies)