Central bank"s independence must not overlook people"s suffering: PM

Prime Minister Srettha Thavisin said on Thursday that an interest rate cut by the Bank of Thailand (BoT) would have been good for the Thai economy, in response to the bank’s decision to hold interest rates steady.

“The independence of the central bank should not be independent of the suffering of the people,” said Mr Srettha, also the finance minister.

He has repeatedly stressed the need for rate cuts, citing waning demand and lacklustre growth to support his case. 

The BoT on Wednesday voted 5-2 to hold rates at 2.50%, again resisting government pressure to make a cut. The next rate review is on June 12.

Mr Srettha has been at loggerheads with the central bank for months, urging it to cut rates that are a decade high to try to drive an economy he insists is in crisis, and lagging regional peers.

“Most academics agree that it is time to cut rates, it would help exports, tourism and help the economy … everybody would benefit,” he said on Thursday.

Mr Srettha has repeatedly said rate cuts would help as the economy confronts the challenges of high household debt and China’s slowdown.

Southeast Asia’s second-largest economy unexpectedly shrank 0.6% in the final quarter of 2023 from the third, prompting the state planning agency to cut its 2024 growth outlook to between 2.2% and 3.2% from the 2.7% to 3.7% earlier projected.

Growth was 1.9% in 2023, lower than expected and less than the 2.5% expansion recorded in 2022.

The Bank of Thailand said on Wednesday that the current interest rate was appropriate for the country’s economic outlook and did not hinder growth.

It also revised down its 2024 GDP growth forecast to 2.6% from an earlier range of 2.5% to 3.0%.