BANGKOK (Reuters) – Thailand’s low inflation indicates there is potential for an interest rate reduction to stimulate economic growth and help weaken the baht
Out of 26 economists surveyed by Reuters, 16 anticipate that the Bank of Thailand will keep the key rate steady at 2.25% on Wednesday.
“A decrease in interest rates will invigorate the economy, allowing us to sustain its momentum this year,” Pichai Chunhavajira told reporters.
“Our inflation remains consistently low, enabling us to lower interest rates because prolonged low inflation can impact producers due to reduced goods pricing.”
The annual headline inflation rate was 1.32% in January, following an average of 0.4% last year, significantly below the central bank’s target range of 1% to 3%.
Pichai committed to implementing additional measures to tackle the ongoing household debt issue and urged banks to increase lending, while encouraging the central bank to adopt more flexible loan-to-value policies to support the property sector.
He also highlighted the importance of a weaker baht for Thailand’s export-driven economy, noting: “Every exporting country aims to have its currency devalue.”
Since the beginning of the year, the baht has appreciated by 2.5% against the dollar.
Pichai mentioned that discussions regarding inflation, household debt, lending, the baht, and interest rates have taken place with the central bank.
(Reporting by Kitiphong Thaichareon and Orathai Sriring; Editing by Martin Petty)
