The Ministry of Finance and the Bank of Thailand will meet next week to discuss the strong baht and the country’s inflation target, minister Pichai Chunhavajira said on Tuesday, as the government continues to push for an interest rate cut.
The plan to seek a review of the inflation target follows months of government pressure on the central bank to cut the rate from a decade-high 2.50%, in a bid to boost growth of an economy that has been struggling to take off since the pandemic ended.
A review of the 1-3% inflation target range, which has been in place since 2020, could raise the chance of a rate cut.
Inflation in August was 0.35% on an annualised basis, the fifth consecutive month of modest increases. The full-year rate is now projected to average 0.8%.
Southeast Asia’s second-largest economy is forecast to grow by 2.6% this year from an expansion of 1.9% last year, well behind regional peers. The government is hoping that stimulus measures, including a 10,000-baht handout to millions of people, could trigger a rebound.
The government has also been attempting to raise the daily minimum wage nationwide to 400 baht from the current range of 330 to 370 baht depending on the province. More money in workers’ pockets will give a lift to consumption, officials say.
However, the new rate will not take effect on Oct 1 because the national wage committee has yet to approve it. Representatives of employers, who oppose the move, were no-shows at one meeting, and a second meeting last Friday failed to achieve a quorum.
Prime Minister Paetongtarn Shinawatra said on Tuesday that the government would push for the wage hike to take effect before the year ends.
The baht’s rapid appreciation will also be on the agenda for the talks between the finance ministry and the central bank.
The Thai Chamber of Commerce on Monday urged the central bank to take measures to stabilise the baht, the recent strength of which it said was hurting exports and tourism, key drivers of the economy.
The baht was trading around 32.90 to the greenback early on Tuesday and has been trading at its strongest level in more than 19 months. It has gained 13% against the dollar since a low in April of 37.17.
- Special Report: All eyes on the Thai baht
