PM meets Bank of Thailand chief after shock rate hike
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PM meets Bank of Thailand chief after shock rate hike

Bank of Thailand governor Sethaput Suthiwartnarueput gives a keynote address at the Digital Finance Conference 2023 on Sept 14, 2023. (Bangkok Post file photo)
Bank of Thailand governor Sethaput Suthiwartnarueput gives a keynote address at the Digital Finance Conference 2023 on Sept 14, 2023. (Bangkok Post file photo)

Prime Minister Srettha Thavisin said his meeting with central bank governor Sethaput Suthiwartnarueput at Government House on Monday discussed economics and finance.

"The exchange of opinion was productive and we will meet on a monthly basis," Mr Srettha posted on social media platform, X. 

The meeting lasted about 45 minutes, and Mr Sethaput left without speaking to reporters.

At the Finance Ministry, Mr Srettha – who is also the finance minister – said Mr Sethaput "voiced concerns and recommendations" and he listened.

The prime minister said there was no conflict between them.

The meeting came less than a week after an unexpected hike in interest rates seemed to clash with government efforts to stimulate the economy.

Mr Srettha reiterated plans on Monday to inject 560 billion baht into the economy next year through his signature digital wallet policy, the key plank of his Pheu Thai Party's electoral platform.

The real estate mogul, who is also finance minister, has already rolled out a raft of policies including cutting electricity prices and waiving visa for Chinese tourists to boost short-term economic growth.

However, the central bank last week raised key rates to 2.50%, the highest in 10 years while slashing its 2023 growth outlook 2.8% from 3.6% and upping its 2024 forecast to 4.4% from 3.8%, anticipating upside inflation risks from new government policies. Growth was a sluggish 2.6% last year.

Prior to the meeting, Mr Srettha said he would discuss "everything" with Mr Sethaput. The governor on Friday said he did not know what would be on the agenda.

Mr Sethaput last month said there was little need to boost consumption. On Friday, following the rate hike, he said that a pause was suitable "for now".

All 20 economists in a Sept 27-29 Reuters poll expected the Bank of Thailand (BoT) to hold rates at its next review on Nov 29.

"Raising rates could slow down the economy because it delays investment," said Siam Commercial Bank economist, Poonyawat Sreesing.

But as inflation comes into the 1% to 3% range, rates are expected to hold, even if the economy grows at 5%, Poonyawat added.

The different approaches of the government and the BoT are not at odds with each other, some analysts say.

"The central bank wants to ensure a stable recovery while the government wants the economy to return to normal ... both want to see growth," said Krung Thai Bank economist, Phacharaphot Nuntramas, adding the government's approach poses some fiscal risks that have to be managed.

In livestreamed remarks on Monday, Mr Srettha reiterated the government would further reduce electricity prices and triple farmer incomes within four years, while pursuing new free trade pacts aimed at turning Thailand into a major destination for foreign investors.

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