Finance Minister Pichai Chunhavachira has reaffirmed his call for a reduction in the policy interest rate to stimulate Thai inflation.
He said that at Wednesday's meeting of the Monetary Policy Committee (MPC), the Finance Ministry would like to see the MPC announce another policy rate cut to help increase the rate of inflation, as the current rate remains low.
He acknowledged that the decision on policy rate adjustments is within the MPC's authority, noting that the Finance Ministry has consistently provided economic data and engaged in thorough discussions with the Bank of Thailand.
Regarding the inflation management target framework for 2025, Mr Pichai said the Finance Ministry will present it for consideration by the cabinet this month before it is announced for the central bank to manage inflation within the defined target range.
Regarding the nomination of the new board chairman of the Bank of Thailand, Mr Pichai said he is currently in the process of reviewing the qualifications after the finance permanent secretary presented a list based on the results from the selection committee, chaired by Satit Limpongpan.
He noted that there is still time for consideration until mid-January 2025.
He also mentioned the second phase of the 10,000-baht cash handout programme for individuals aged 60 and above, saying that the programme will be implemented during Chinese New Year next month. In the meantime, preparations are underway to present it for cabinet approval, he said.
In a related development, local research houses predicted the central bank would keep its policy rate unchanged at 2.25% during its meeting on Wednesday to preserve the monetary policy space to cope with rising uncertainties during the upcoming year.
They suggested another rate cut by the central bank could occur in February 2025.
Kasikorn Research Center (K-Research) expects the MPC to vote unanimously to keep the policy interest rate unchanged at 2.25% at Wednesday's meeting.
The projection for maintaining the policy rate is based on the MPC's view that the benchmark rate is at a neutral level, aligning with economic risks, inflation, and financial stability.
"Given that the current risk landscape has not changed significantly, and with the Thai economy expected to accelerate in the fourth quarter -- boosted by seasonal tourism and government stimulus measures -- the MPC is likely to keep the policy rate unchanged at Wednesday's meeting," said K-Research.
At its previous meeting in October, the MPC reduced the policy rate by 25 basis points, marking the first rate cut in four years. The decision aimed to position the interest rate at a neutral level.
K-Research expects the MPC to cut the policy rate two more times next year, driven by increasing risks to the Thai economy. These risks include the potential for the US to raise import tariffs on several countries, including Thailand.
Additionally, Thai products may face heightened competition from Chinese goods entering the market, which could negatively affect Thai manufacturers. Inflation in 2025 is expected to remain below the central bank's target range of 1-3%.
However, the future trajectory of monetary policy, particularly the timing and extent of potential rate cuts, remains highly uncertain. It will largely depend on evolving economic data, inflation trends, and financial stability indicators, according to K-Research.
Krungsri Global Markets and Research, under the Bank of Ayudhya (Krungsri), also predicts that the MPC will maintain the policy rate at 2.25% during Wednesday's meeting.
"This decision will allow the MPC to assess the effects of October's rate cut and the government's stimulus measures while preserving the policy space for future adjustments. However, we expect the MPC to lower the rate to 2% in February 2025," Krungsri noted.
Meanwhile SCB EIC, a research centre under Siam Commercial Bank, expects the MPC to keep the policy rate unchanged in December in line with the MPC's strategy of preserving the monetary policy space to address future uncertainties in Thailand's economy and financial system.
However, it believes the MPC may opt for an additional 0.25 percentage point rate cut at its February 2025 meeting. This would further ease monetary policy to support liquidity, especially in light of increasing downside risks to the Thai economy, particularly from the potential impact of a Trump 2.0 policy direction.
