PM says he won’t stop pushing for rate cut

PM says he won’t stop pushing for rate cut

Srettha says central bank has ‘plenty of room’ to make a change and help the economy

Shoppers purchase goods at a supermarket in Bangkok. Consumer price inflation has been in negative territory for four months but the Bank of Thailand insists that figure does not tell the whole story about the economy.
Shoppers purchase goods at a supermarket in Bangkok. Consumer price inflation has been in negative territory for four months but the Bank of Thailand insists that figure does not tell the whole story about the economy.

Prime Minister Srettha Thavisin said on Thursday he would continue pushing for lower interest rates and would meet with the head of the Bank of Thailand to discuss the issue at an appropriate time.

Mr Srettha said there was space for easing and the current rate of 2.50%, a 10-year-high, was hurting the public and could exacerbate stubbornly high household debt levels.

“With 2.5%, there is still plenty of room if there is any crisis,” he told reporters.

A reduction of 25 basis points should not be a problem for the central bank in driving its policies, said Mr Srettha, who is also the finance minister.

On Tuesday he called on the central bank to hold an emergency meeting to cut rates before its next scheduled policy review on April 10, saying the economy was at a “critical” stage.

Bank of Thailand Governor Sethaput Suthiwartnarueput responded by saying he saw no need for an emergency meeting, reiterating that the problems weighing on the domestic economy won’t be solved by reversing monetary policy.

The central bank chief has said that the issues were structural and cutting rates or pumping stimulus into the economy, as the government is proposing, would not address fundamental weaknesses.

Mr Srettha argues that consumer price inflation has been in negative territory for four months but the central bank says that figure does not tell the whole story about the economy.

Piti Disyatat, a BoT assistant governor, said last week that the central bank would be willing to lower borrowing costs if it was convinced that the weakness in the economy was persistent and not transitory. The country’s high level of household debt has been seen as one reason behind the reluctance to reduce rates.

The household debt ratio has been hovering at about 90% of gross domestic product, and the government and central bank have both been promoting programmes intended to reduce it to 80%.

In a related development, the Ministry of Finance said it would offer 40 billion baht worth of government savings bonds from March 6 to help finance the budget deficit.

The bonds have a maturity of five and 10 years, with a coupon of 3% per year and 3.4% per year respectively, said Patchara Anuntasilpa, head of the Public Debt Management Office. 

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