Bangkok, September 5, 2025 — Bank of Thailand Governor Sethaput Suthiwartnarueput is advocating for a more adaptable approach to inflation targeting, urging policymakers to ease the strict adherence to numerical thresholds in favour of a more fluid, medium-term outlook. Speaking in London, he warned that tight inflation control is becoming increasingly challenging amid persistent price shocks and changing consumption patterns.([turn0search4])
“Inflation may deviate from targets more often and more persistently even as it remains anchored over time,” Sethaput said, emphasizing that excessive fine-tuning of monetary policy carries risks. He proposed that central banks should focus less on short-term fluctuations and more on maintaining inflation stability over the medium term.([turn0search4])
Context: Thailand’s Inflation Framework and Policy Moves
Since 2020, Thailand’s inflation targeting range of 1.0% to 3.0% has been considered appropriate for medium-term price stability. This framework was reaffirmed by both the central bank and the government when they jointly approved it for 2025.([turn0search5], [turn0search7]) Under existing rules, the governor is required to issue an open letter to the Finance Minister if inflation strays outside this range.
In practice, inflation has undershot the lower bound for several months this year, prompting multiple rate cuts from the Bank of Thailand. The benchmark rate was trimmed to 1.75% in April, and more recently down to 1.50%, marking the lowest level in more than two years. These reductions reflect the bank’s response to lagging global demand, supply-side deflation, and rising household debt.([turn0news24], [turn0news23])
Why This Matters
Governor Sethaput’s remarks signal a shift toward a looser and more pragmatic monetary policy stance, one that may give the Bank greater flexibility when inflation remains persistently below target. Amid weakening economic momentum—affected by falling consumer prices, faltering tourism, and global trade friction—the central bank wants to avoid overcorrection that could destabilize growth.
Sethaput is expected to step down on September 30. His successor, Vitai Ratanakorn, slated to take over on October 1, is seen as more dovish and likely to continue supportive policies focused on economic recovery.([turn0news22], [turn0search25])
