Bank of Thailand Governor Sethaput Suthiwartnarueput cautioned against adjusting the inflation target, highlighting concerns that increasing the target could lead to a faster rise in prices and potentially harm economic growth. In an interview with Bloomberg Television, Governor Sethaput emphasized the effectiveness of the current inflation target range of 1%-3% in anchoring inflation expectations.
He expressed that altering the inflation target could unsettle expectations and lead to higher inflation rates, which in turn could raise borrowing costs for both the government and the overall economy. Governor Sethaput stressed that maintaining the current target range is crucial to ensuring stable inflation expectations.
The Finance Ministry has proposed a review of the inflation target after a period of below-target consumer price increases. Despite calls for rate cuts, the Bank of Thailand has maintained its stance on focusing on structural reforms rather than reducing borrowing costs to stimulate economic growth.
The Monetary Policy Committee recently opted to keep the key interest rate unchanged at 2.5% for the fourth consecutive time, indicating optimism for gradual economic growth and inflation improvements in the coming year. The next rate-setting meeting is scheduled for August 21st.
