Thailand’s government is set to discuss the inflation target and the strong baht with the central bank next week, according to Finance Minister Pichai Chunhavajira. The move comes as the government continues to push for an interest rate cut in an effort to boost the struggling economy. The Bank of Thailand’s interest rate, currently at a decade-high 2.50 per cent, has been under government scrutiny for months, with calls to reduce it.
A review of the inflation target, which has been set at 1 per cent to 3 per cent since 2020, will be on the agenda. This review, first reported by Reuters, may increase the likelihood of the long-awaited rate cut, initially sought by former prime minister Srettha Thavisin, who was dismissed from office last month by court order. Inflation in August stood at 0.35 per cent.
On Tuesday, Prime Minister Paetongtarn Shinawatra announced that the government would continue to push for a minimum wage hike to 400 baht ($12) by the end of the year, after missing the October deadline. The minimum wage in Thailand currently ranges between 330 and 370 baht, depending on the region.
Southeast Asia’s second-largest economy is projected to grow by 2.6 per cent this year, up from last year’s expansion of 1.9 per cent, but still lagging behind its regional peers. The government hopes a series of stimulus measures, including a 450 billion baht ($13.66 billion) handout and an increase in the daily minimum wage, will help spur a rebound.
The Finance Ministry is also planning to discuss the baht’s recent appreciation with the central bank. On Monday, a Thai business chamber called for the central bank to intervene, stating that the baht’s strength was negatively impacting exports and tourism—two key sectors of the economy.
The baht reached around 32.9 to the US dollar on Tuesday morning, marking its strongest position in over 19 months. Since April, the currency has gained 13 per cent against the dollar, having previously dropped to a low of 37.17.
Source: Reuters
