The governor of the Bank of Thailand, Sethaput Suthiwartnarueput, stated that low inflation in Thailand is not an indication of deflation and does not hinder economic growth. His comments were in response to a question from Finance Minister Pichai Chunhavajira regarding the inflation rate, which has remained below the central bank’s target range for most of the past year.
In an open letter to the minister dated April 1 and made public on Friday, Mr. Sethaput predicted that inflation would likely stabilize near the lower end of the 1% to 3% target range and could dip below it during certain periods.
According to the Ministry of Commerce, consumer price inflation slowed to 0.84% year-on-year in March, with expectations of a decrease to around 0.15% in the second quarter due to declining energy prices.
Ministers in the Pheu Thai-led government have frequently commented on the low inflation rate, suggesting it indicates a weak economy that could benefit from lower interest rates. In response, Mr. Sethaput has emphasized that the Thai economy requires fundamental reforms rather than short-term fixes.
In his letter, he noted that inflation expectations remain “anchored in the target range” and explained that the current low inflation has been influenced by supply-side factors without impeding competition and investment.
Mr. Sethaput assured that the Bank of Thailand (BoT) would ensure inflation remains at appropriate levels and that monetary policy would focus on managing economic risks. In February, the central bank reduced its key interest rate by 25 basis points to 2.00% due to weaker growth prospects, with the next review of monetary policy scheduled for April 30.
