Thai Finance Minister Signals Room for Rate Cut Amid Low Inflation

BANGKOK: Thailand’s Finance Minister, Pichai Chunhavajira, stated on Tuesday that there is room for a rate cut, given the low inflation levels, though he emphasised that the final decision rests with the central bank. Speaking at a business forum, he reiterated his call for a coordinated approach between monetary and fiscal policy to support the economy.

The minister also expressed a desire for the Thai baht to stabilise at a weaker level to help boost economic growth. He forecasted that with the right policy coordination, the Thai economy could grow between 4% and 5% in 2026, following an expected growth of 2.6% to 2.8% for this year.

Thailand’s economy grew by 3% in the third quarter (July-September), the fastest pace in two years and above expectations. However, both officials and analysts foresee increased challenges in sustaining this momentum in the coming year.

After his speech, Pichai commented that he hoped the central bank would consider another rate cut, following the 0.25% reduction in October, which brought the key interest rate to 2.25%. The next policy review is scheduled for December 18.

For the January-October period, Thailand’s average annual headline inflation was just 0.26%, well below the central bank’s target range of 1% to 3%. The International Monetary Fund (IMF) has also stated that another rate cut could further support the country’s economic recovery.

At a separate event, Bank of Thailand (BOT) Governor Sethaput Suthiwartnarueput stressed that a mix of policies was needed to effectively manage the economy, stating that interest rates alone “can’t fix everything.” He added that the central bank’s policies would be guided by the overall economic outlook, rather than short-term data, which he said could be volatile and unreliable.

Governor Sethaput also indicated that measures to address high household debt would be announced on December 11.

In addition, Finance Minister Pichai revealed plans to explore reducing personal and corporate taxes to improve Thailand’s global competitiveness. He also noted that the government was considering increasing the value-added tax (VAT) rate, which currently stands at 7%.

Thailand’s corporate tax rate is set at 20%, while personal tax rates can reach up to 35%.