PM blames economic woes on central bank

PM blames economic woes on central bank

Prime Minister Srettha Thavisin, 3rd left, and Bank of Thailand governor Sethaput Suthiwartnarueput, right, enter a meeting on the government's policy 10,000-baht digital wallet handout at Government House last October. (Photo: Chanat Katanyu)
Prime Minister Srettha Thavisin, 3rd left, and Bank of Thailand governor Sethaput Suthiwartnarueput, right, enter a meeting on the government's policy 10,000-baht digital wallet handout at Government House last October. (Photo: Chanat Katanyu)

Prime Minister Srettha Thavisin has accused the Bank of Thailand of damaging the economy, causing troubles for the poor and small- and medium-sized businesses, by raising its policy rate.

In a post on X (formerly Twitter) on Sunday night, Mr Srettha said the central bank had raised its policy rate even though there had been negative inflation for months. The rise did not benefit the economy, and adversely affected low-income earners and SMEs, he said.

During a visit to the Royal Thai Police Office on Monday morning, the prime minister said he disagreed with the BoT's interest rate hike and had made his position clear.

"I say that (inflation) is very low. So, an interest reduction should be considered. I would like to send this message," Mr Srettha said.

The prime minister said the interest hike affected prices of farm goods, and he had ordered the Ministry of Commerce to prevent farm prices falling. "If they are too low, there will be trouble," he said.

Mr Srettha said he would discuss the issue with BoT governor Sethaput Suthiwartnarueput.

His chief adviser Kittiratt Na-Ranong said on the TV programme Inside Thailand on Monday that substantial and quick interest reduction would be a way out of economic problems and the BoT should respond to government policies.

Rising interest rates were opportunities for commercial banks to raise revenue because loan interest rates increased faster than deposit rates, he said.

Mr Kittiratt said agencies would monitor the decision of the BoT's monetary policy committee (MPC) when it next meets on Feb 7.

The MPC raised the policy rate eight times, from 0.50% in August 2022 to 2.50% in September last year,  in its efforts to control inflation, which ran at its fastest pace of 8% in 2022, and on positive economic outlook.

On Nov 29, 2023, the MPC maintained the rate at 2.50%, saying the rate was suitable for economic fundamentals and economic recovery, which was reflecting economic growth potential.

The BoT is independently responsible for monetary policy - mainly the management of interest rates and the total supply of money in circulation. The government is in charge of fiscal policy, affecting the economy through the raising and spending of taxes and loans. 

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