Cabinet Pushes Bank of Thailand for Rate Cut to Boost Inflation

[webfact]

File photo

 

In a decisive move, the Thai cabinet has urged the Bank of Thailand (BoT) to consider reducing interest rates to avoid inflation drifting below its target range.

 

Following a cabinet meeting on Tuesday, Deputy Finance Minister Paopoom Rojanasakul announced they had formally requested the central bank to reassess its monetary policy ahead of the Monetary Policy Committee (MPC) meeting scheduled for Wednesday.

 

A Persistent Concern:

With inflation currently lingering at 1.3%, marginally within the BoT's desired 1-3% range, the cabinet expresses concern. Last year saw inflation at a historic low of 0.4%, despite the economic revival and booming tourism. The government believes a rate cut could stimulate inflation, sustaining economic growth.

 

Policy in Alignment:

Paopoom emphasized the necessity of synchronizing monetary policies with existing fiscal strategies to efficiently foster economic development. "Fiscal efforts alone aren't enough; alignment is crucial," he noted. The cabinet is attempting to ensure that monetary adjustments remain harmonious with their broader economic vision.

 

Potential Impacts:

The MPC had previously reduced the rate by 25 basis points to 2.25% in October, supporting financial system capital flow and economic activities. However, there's caution from experts about preserving monetary tools for unexpected economic challenges. Yet, Paopoom reassurred on having ample room to manoeuvre without straying into risky terrains.

Looking Forward:

With the final 2024 MPC meeting looming in December, the spotlight will be on examining the economy's contours amidst reduced credit growth and pandemic-induced debt repayment pressures. The interest rate is currently holding at a neutral 2.25%. However, the cabinet's pro-active stance suggests potential adjustments, aiming to invigorate the economy whilst easing debt burdens.

 

This appeal by the cabinet highlights a strategic push to shield the economy from unforeseen economic shifts while anchoring fiscal and monetary coherence going forward. The forthcoming MPC dialogue will invariably weigh these issues as it steers cautiously through external pressures and domestic demands, reported Bangkok Post.

 

-- 2025-02-26

 

 

[Gottfrid]

Yeah, that will surely work. I think the relation between domestic economy and international economy is a little bit more complexed than they have the capacity to understand.

[Emdog]

Along the lines of bars raising beer prices because they are seeing fewer customers....

[worgeordie]

4 hours ago, webfact said:

A Persistent Concern:

With inflation currently lingering at 1.3%, marginally within the BoT's desired 1-3% range, the cabinet expresses concern. Last year saw inflation at a historic low of 0.4%, despite the economic revival and booming tourism. The government believes a rate cut could stimulate inflation, sustaining economic growth.

What are they basing those rates on , as they are no way what is happening in the real World,

the wet markets ,supermarkets , Malls , stuff you are buying everyday ,the important stuff like

food , prices are rising like 10 % or more 

 

regards worgeordie

[Harrisfan]

4 minutes ago, worgeordie said:

What are they basing those rates on , as they are no way what is happening in the real World,

the wet markets ,supermarkets , Malls , stuff you are buying everyday ,the important stuff like

food , prices are rising like 10 % or more 

 

regards worgeordie

English dropped 50%.

[Harrisfan]

Cost of food in Thailand increased 1.28 percent in December of 2024 over the same month in the previous year. Food Inflation in Thailand averaged 4.58 percent from 1977 until 2024, reaching an all time high of 26.34 percent in May of 1980 and a record low of -7.05 percent in November of 1984

 

https://tradingeconomics.com/thailand/food-inflation

[hotchilli]

1 hour ago, Emdog said:

Along the lines of bars raising beer prices because they are seeing fewer customers....

Just like the girls, milking it while the goings good.

[Srikcir]

6 hours ago, webfact said:

the cabinet's pro-active stance suggests potential adjustments

'suggests protective adjustments' so government seems to have solutions.

[khunjeff]

1) The Bank of Thailand is independent, so the cabinet shouldn't be "urging" it to do anything - just leave it alone and let it do its job.

 

2) As others have noted, that inflation figure is as absurd as the sub-1% unemployment figures that the government here regularly publishes, so there isn't even a problem to address.