The Bank of Thailand (BOT) is maintaining its monetary policy stance amid calls for an emergency meeting due to the nation’s economic challenges. In a recent interview, BOT Governor Sethaput Suthiwartnarueput discussed the central bank’s decision to keep the interest rate steady at 2.50% per annum despite political pressures and the current economic situation described by some as a crisis.
Sethaput explained that lowering the interest rate would not directly address the primary causes of slow GDP growth and negative headline inflation, such as reduced spending by Chinese tourists, decreased petrochemical imports by Chinese firms, and delayed government budget disbursement.
Despite consecutive months of negative inflation and sluggish GDP growth figures released by the National Economic and Social Development Council (NESDC), the BOT chose not to adjust the rate during its Monetary Policy Committee (MPC) meeting on February 7. This decision came even after the government urged for rate cuts to alleviate economic pressures. Sethaput made clear the importance of targeted measures over broad financial support to address issues such as stagnant incomes and high household debt, which he attributed to prolonged periods of low-interest rates.
Sethaput also commented on the relationship between the BOT and the government, describing it as professional and cordial despite differing perspectives on monetary policy. He reiterated the central bank’s role in promoting sustainable economic practices, including efforts to manage the high household debt level, which exceeds 90% of GDP. (NNT)
