Thai govt urges central bank to align policy rates with growth goals

Even though the final decision rests with the Monetary Policy Committee, the Cabinet insists that Thailand has enough fiscal space to ease rates

The Cabinet resolved on Tuesday to call on the Bank of Thailand (BOT) to implement monetary policies that maintain the inflation at the target range of 1-3%, Deputy Finance Minister Paopoom Rojanasakul said.

He added that these policies should be aligned with fiscal policies to support economic growth. 

"The government anticipates a further reduction in the policy interest rate,” he said. “The extent of the cut should be carefully considered, factoring in its impact on inflation, exchange rates and overall economic growth.”He noted that the previous rate reduction, from 2.50% to 2.25% in October 2024, had increased capital circulation and had positive effects on inflation and exchange rates. 

“This is the second time the Cabinet has called on the BOT to lower the policy rate, as the current inflation rate remains well below the target range and shows no sign of rising,” he said.

As for the National Economic and Social Development Council’s recommendation to maintain the policy rate, Paopoom argued that Thailand still has sufficient fiscal space to accommodate a further cut and that “there is no need to be overly conservative”. 

However, he acknowledged that the final decision rests with the BOT’s Monetary Policy Committee.

(2025/02/25-00:00)