The Cabinet has urged the Bank of Thailand’s Monetary Policy Committee (MPC) to cut the current policy rate of 2.25% at its meeting today, Deputy Finance Minister Paopoom Rojanasakul said yesterday.
He stated that the Cabinet has sent a letter to the central bank—its second from this administration—urging a policy rate review, as inflation remains below the target range of 1% to 3%.
Thailand’s inflation rate has been low for an extended period and is unlikely to reach the target range, he said, adding that the Cabinet believes the central bank’s monetary policy must align with the government’s fiscal policy.
Thailand’s inflation rate for January was 1.32%, up from 1.30% in December—the highest since May last year. The rates for the two previous months were within the central bank’s 1-3% target range.
In October last year, the MPC cut the policy rate by 25 basis points, from 2.50% to 2.25%, marking its first reduction in four years.
Paopoom said the October rate cut helped boost cash flow in the economic system and improve the economy. He stressed that monetary policy is a crucial issue and believes a policy rate cut would have positive economic effects.
The deputy finance minister said he could not predict whether the MPC will cut the policy rate but expressed hope for a positive response.
Siam Commercial Bank CEO Kris Chantanotoke said that, as the Thai economy continues to face significant risks and challenges, fiscal and monetary policies must be harmonized to drive economic growth.
However, he noted that the government must also introduce new measures to complement any policy rate cut.
