The medium-term inflation target and the target for 2022

The Minister of Finance and the MPC mutually agreed to set the monetary policy target for price stability such that the headline inflation was to reside within the range of 1.0 – 3.0 percent for the medium-term horizon and for the year 2022. This range target was deemed appropriate for the evolving economic environment as a result of the COVID-19 outbreak because: (1) Thai inflation going forward and in the medium-term was expected to reside close to the lower bound of the target. This was due to the gradual economic recovery and some potential upside risk factors from higher energy prices, supply chain disruption, and geopolitical conflicts, (2) this range target had successfully anchored inflation expectations as could be seen from inflation expectations still residing within the target, and (3) the two-percent target width provided adequate flexibility to address the volatility surrounding inflation going forward while supporting efficient monetary policy formulation under highly uncertain circumstances in order to attain price stability, promote sustainable economic growth, and ensure financial stability. 

Due to the highly uncertain COVID-19 development and its potentially large impact on the Thai economy, the Ministry of Finance and the Bank of Thailand would continue to coordinate the fiscal and monetary policies that would be harmonized and complement each other. At present, the MPC continued to put emphasis on supporting the economic recovery and would stand ready to employ policy tools in an integrated way in order to efficiently achieve monetary policy objectives.

In the  case  that headline inflation breaches the announced target

A mutual agreement between the MPC and the Minister of Finance states that

"In case that the average headline inflation in the past 12 months or its forecast for the next 12 months fell outside the target range, the MPC would issue an open letter to the Minister of Finance to elaborate on (1) reasons for the breach of the target range, (2) monetary policy implementation in the past and going forward to guide the headline inflation into the target range at an appropriate time, and (3) expected time horizon for the headline inflation to fall within the target range.  In addition, the MPC would issue an open letter to the Minister of Finance every six months should the average headline inflation, according to the above criteria, remain outside the target range and would report the progress on policy actions taken as deemed appropriate."