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Thai Prime Minister announces inflation review, but central bank previously said no issues

TraderKnows
TraderKnows
06-13

This Wednesday, the Bank of Thailand ignored the Prime Minister's call to maintain existing policies, and on Thursday, the President of Thailand made it clear that inflation would be reviewed.

Thai Prime Minister Srettha Thavisin said on Thursday that the Bank of Thailand and the Ministry of Finance are about to review the inflation target range, which will increase the possibility of a rate cut.

Although the government has called for the reduction of borrowing costs to help revive Southeast Asia's second-largest economy, the central bank held the key rate steady for the fourth consecutive meeting on Wednesday.

Since 2020, the current inflation target range has been 1% to 3%, and it is reviewed annually.

Srettha told reporters, "Setting a new inflation range could provide more flexibility in lowering interest rates."

Last month, Finance Minister Pichai Chunhavajira said he would meet with the central bank governor to review the inflation target range to formulate an appropriate interest rate policy.

From January to May this year, the average overall inflation rate was -0.13%, and the central bank projected the annual inflation rate to be 0.6%.

However, the central bank stated on Wednesday that the current inflation target range remains consistent with economic fundamentals and can still stabilize medium-term inflation expectations.

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Inflation

Inflation refers to the phenomenon where the purchasing power of a country's (or region's) currency decreases, leading to a general rise in the prices of goods and services. It is reflected in the fact that, over a certain period, the same amount of money can only buy fewer goods and services.

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