PM Asks Public to Judge Central Bank for Not Cutting Rates

BANGKOK – Prime Minister Srettha Thavisin expressed his disappointment again on Thursday that the Monetary Policy Committee (MPC) voted on April 10, 2024 to keep the policy interest rates at 2.5 percent per annum, despite his request for them to consider reducing it. He said that high interest rates are suppressing people’s purchasing power, so he asked the public to be the judge.

“I don’t want to argue with them anymore because I think my position on reducing interest rates is clear. They will find another reason to say that I am pressuring the Governor of the Bank of Thailand again. He has his independence, but I would like to remind him that independence does not mean being independent from the people’s hardship. He must also consider the people’s hardship.”

The Prime Minister also said that almost all academics now agree that the interest rate should be reduced. He said that if the interest rate is reduced, the economic side effects will be positive rather than negative. It will not weaken the baht, but will improve Thai exports. We currently export 60 percent of GDP and tourism another 20 percent. 1 US dollar can be exchanged for 36, 37, 38 baht, which will increase the amount of money available for spending in the country.

“When tourists come to our country, they do not just stay in big hotels or only benefit from the big tycoons. They come to shop, they come to eat, everyone benefits. I think this is a basic economic rule that everyone knows. I do not know what else to say, because I have already said a lot and I have said enough. It’s time for others to speak up.”

The Prime Minister asked where the Bank of Thailand’s Governor, Setthaput Suthiwatnarueput, was when he started the meetings of the Digital Wallet Policy Committee on March 27 and April 10. The governor was not there twice.

Mr. Piti Disyatat, Secretary of the Monetary Policy Committee, announced the results of the meeting that the MPC voted 5 to 2 to keep the policy interest rate at 2.50 percent per annum. Two members voted to reduce the policy interest rate by 0.25 percent.

The majority of those present agreed that the Thai economy is likely to record high growth. It is expected to grow by 2.6 percent this year and 3 in 2025. Exports are expected to gradually recover in the second half of this year and government spending is expected to increase again. This will lead to overall inflation of 0.6 percent this year and 1.3 percent next year, while core inflation is expected to be 0.6 percent this year and 0.9 percent next year.

“The Committee has always considered fiscal policy and tried to make it consistent. It was seen that monetary policy has limited effectiveness in solving structural problems. Therefore, it was decided to keep the policy interest rate in this meeting,” said Mr. Piti.

Mr. Piti also commented on the Prime Minister’s view that this is a sensitive issue and no one is 100 percent right or wrong. It is a matter of weighing the pros and cons. The Prime Minister must have weighed it differently, and the MPC will have to weigh it again in the next meeting under new assumptions.

The digital wallet scheme will kick off in the fourth quarter. He said it is unlikely to have a major impact on the economy this year. Most of it will happen in 2025. Therefore, he still believes that the overall impact will not be big enough to affect the implementation of the policy.