Bangkok: The Ministry of Finance and the Bank of Thailand are advancing towards their medium-term monetary policy target, aiming for a headline inflation rate of 1-3 percent. The strategy includes using the policy interest rate and implementing monetary measures to address debt issues while supporting new lending.
According to Thai News Agency, Mr. Vinit Visetsuwannapoom, Director of the Fiscal Policy Office and spokesperson for the Ministry of Finance, disclosed that the Cabinet has approved the medium-term monetary policy targets and the targets for 2026. These were agreed upon by the Monetary Policy Committee (MPC) and the Minister of Finance, in compliance with Section 28/8 of the Bank of Thailand Act, B.E. 2485, as amended by the Bank of Thailand Act (No. 4), B.E. 2551.
The key aspects of the policy include a joint agreement between the MPC and the Minister of Finance on setting monetary policy targets for the medium term and for 2026. The medium-term headline inflation target is set at 1-3 percent, with a 2026 goal to gradually align headline inflation with this target. The aim is to prevent deflation caused by widespread price declines in goods and services. This target is considered effective for maintaining price stability by anchoring medium-term inflation expectations.
Furthermore, the Ministry of Finance and the Bank of Thailand will collaborate on fiscal and monetary policies to ensure sustainable economic growth aligns with potential, facilitating the return of inflation to the target level. The focus of monetary policy will be on maintaining price stability alongside economic growth and financial system stability, under a flexible inflation targeting (FIT) framework. This approach will employ a combination of tools, including setting the policy interest rate and using monetary measures to tackle debt problems and support new lending, thereby enhancing the transmission of monetary policy.
For monitoring and reporting policy implementation, the MPC will send an open letter to the Minister of Finance if the average 12-month general inflation rate or the projected average 12-month general inflation rate moves outside the medium-term target. This letter will be sent every six months if the average inflation rate remains outside the target. Additionally, if the general inflation rate continues to deviate from the target range, the Ministry of Finance, the Budget Bureau, the National Economic and Social Development Council, and the Bank of Thailand will jointly discuss and determine appropriate measures to address the situation, reporting the results to the Cabinet quarterly, as per the Cabinet resolution of December 30, 2025.