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Thai Finance Minister says still wants higher inflation target after rate cut

2024.10.17 01:20

BANGKOK (Reuters) – Thailand’s government still wants to see a higher inflation target that will push up prices, the finance minister said on Thursday after the central bank’s surprise interest rate cut a day earlier.

Wednesday’s rate reduction will help increase liquidity and confidence, Pichai Chunhavajira told reporters.

The central bank unexpectedly cut its key rate by 25 basis points to 2.25%, the first reduction since 2020, following repeated calls by the government to ease policy to help revive Southeast Asia’s second-largest economy.

The central bank should consider the trend of interest rates in other countries when next deciding rates, Pichai said.

However, Pichai said a higher inflation target for 2025 would be desirable as he planned to discuss the current inflation target of 1% to 3% with the central bank this month.

“A higher inflation target will help increase inflation because this year it’s clear that inflation has not reached the target yet,” he said.

© Reuters. FILE PHOTO: Thailand's newly appointed Finance Minister and Deputy Prime Minister Pichai Chunhavajira looks on, on the day of the cabinet meeting at Thai Government House in Bangkok, Thailand, May 7, 2024. REUTERS/Chalinee Thirasupa/ File Photo

“We want to see inflation higher than now,” he said, adding it was uncertain that inflation would return to target in 2025.

Annual headline inflation was just 0.61% in September.



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