BANGKOK, Thailand – The Bank of Thailand (BOT) and the Finance Ministry are set to begin negotiations in early September to establish the inflation target for 2025. This comes as the government seeks to adjust economic policy, potentially paving the way for an interest rate cut that has been a point of contention for months.
The discussions are expected to involve the BOT proposing a target approved by its Monetary Policy Committee to reach an agreement with the finance ministry. The current inflation target range of 1-3%, which has been in place since 2020, is under review, with the government pushing for a more accommodating monetary policy to boost the economy.
Despite the government’s calls for a rate cut, the BOT has maintained its benchmark interest rate at 2.50%, the highest in over a decade. The central bank has indicated that altering the inflation target could risk its credibility and affect inflation expectations and borrowing costs. The next rate review is scheduled for October 16.
Thailand’s economic growth remains modest, with the central bank forecasting a 2.6% expansion for 2024, following last year’s 1.9% growth. The upcoming negotiations on the inflation target will be closely watched as both the central bank and the government seek to balance economic recovery with monetary stability. (NNT)
