2026 inflation target set at 1–3%

Thailand’s cabinet approved the monetary policy target for 2026 on December 30, 2025, keeping the headline inflation target range at 1–3%, following a joint agreement between the Ministry of Finance and the Bank of Thailand (BoT). The range is unchanged from 2025.

The cabinet also instructed four key economic agencies — the Finance Ministry, the BoT, the National Economic and Social Development Council (NESDC), and the Budget Bureau — to closely monitor inflation to ensure it remains within the target range. The move follows periods in which inflation fell below the band. Officials warned that if inflation stays below target for an extended period, it could affect the broader economy, and said the agencies should jointly consider appropriate measures if inflation undershoots.

A Government House source said the inflation-target agreement for 2026 was signed on December 26, 2025 by Vitai Ratanakorn, the BoT governor and chair of the Monetary Policy Committee (MPC), and Ekniti Nitithanprapas, as deputy prime minister and finance minister, to set the medium-term monetary policy target and the target for 2026.

The agreement was made under Section 28/8 of the Bank of Thailand Act (1942), as amended by the 2008 revision, which requires the MPC to prepare the following year’s monetary policy target to maintain price stability, agree it with the finance minister, and submit it for cabinet approval.

Under the agreement, the two sides set out five key points:

1) Target and focus for 2026
The Finance Ministry and the MPC agreed that headline inflation should remain within 1–3% as the medium-term target. For 2026, policy will aim to guide headline inflation gradually back towards the medium-term target while preventing deflation — defined as persistently negative inflation driven by broad-based declines in goods and services prices.

They said the 1–3% range remains appropriate because it has helped anchor medium-term inflation expectations and maintain price stability, while providing flexibility to absorb volatility from external shocks and supply-side factors.

2) Flexible inflation targeting and policy coordination
Monetary policy will focus on price stability alongside economic expansion consistent with potential growth and financial stability, under a flexible inflation targeting framework. The agreement emphasised anchoring inflation expectations among households and businesses to prevent inflation staying too low or too high for too long, which could hinder growth or threaten financial stability.

Looking ahead, with Thailand facing multiple challenges, the Finance Ministry and the BoT said they will coordinate fiscal and monetary policy to support sustainable growth and help inflation return to target. Monetary policy will use a mix of tools, including the policy rate and financial measures to address debt problems and support new lending, strengthening policy transmission.

3) Monitoring and reporting
The Finance Ministry and the BoT will hold regular discussions — and additional talks when necessary — to improve the effectiveness of policy implementation and ensure fiscal and monetary policy move in a consistent direction. The MPC will produce a monetary policy report every six months for the finance minister and publish a quarterly monetary policy report to improve public understanding, transparency and effectiveness.

4) Open letter if inflation moves outside the target band
If headline inflation — measured as the average over the past 12 months, or forecast for the next 12 months — moves outside the medium-term target range, the MPC must issue an open letter to the finance minister to explain:

• the causes of the breach,
• the policy approach taken and planned to bring inflation back within the band, and
• the expected time needed for inflation to return to target.

If inflation remains outside the band, the MPC must send an update letter every six months and report progress as appropriate.

5) Adjusting the target if necessary
If there is a justified need, the finance minister and the MPC may jointly agree to revise the target before submitting it to the cabinet.

The MPC assessed that headline inflation in 2026 would remain low, and said monetary policy would be set to support inflation gradually returning to the target range in 2027. However, it warned uncertainty remains high due to external and supply-side factors, including global growth and energy prices, as well as structural shifts such as tougher competition under a changing global trade landscape, deglobalisation pressures, and the transition to a green economy. The MPC said it will monitor and assess these risks closely.