Finance minister presses case for rate cut

Finance Minister Pichai Chunhavajira is once more pushing the government’s case for a cut in interest rates ahead of a meeting next week with the Bank of Thailand, where the inflation target and the strong baht will be on the agenda.
The meeting follows months of government pressure on the central bank to cut interest rates to boost growth of an economy that has been struggling since the pandemic.
“It’s time to talk about the inflation target, which will lead to the policy rate and lead to supporting government polices. They are all related,” Mr Pichai told reporters on the sidelines of an event marking the start of the government’s cash handout programme to the needy and disabled.
He said said he wants to see inflation around 2%, which is a typical target among developing nations, compared with Thailand’s 1-3% band.  
Price growth in Thailand has stayed below 1% year-on-year in 15 of the past 16 months.
High rates are working against the government’s stimulus programme, the minister said.
“We have failed to meet the low end of the target. Our inflation is below 1%. This is something we need to look at,” the minister said before his scheduled meeting next week with central bank governor Sethaput Suthiwartnarueput.
In August, the central bank held key rates at 2.50% for a fifth straight meeting. It has said the policy rate is “neutral” and is not high by global standards. The next rate review is on Oct 16.
The strength of the baht, which has hit 30-month highs against the dollar, is affecting exporters and would also be discussed at the meeting, Mr Pichai said.
Pressure on the central bank has risen in recent days as the baht’s 12% surge this quarter threatens the export and tourism sectors.
Calls for the BoT to curb the currency’s strength by intervention and monetary easing grew even louder after the US Federal Reserve kicked off an easing cycle with a half-point rate cut last week.
The central bank is ready to manage when currency movements are “unusual” to minimise the impact on businesses, assistant governor Pimpan Charoenkwan​ said on Wednesday.
Mr Sethaput, meanwhile, continued to push back against rate cuts, saying last week that Thailand doesn’t necessarily need to follow the US when it comes to interest rates.