BANGKOK, Thailand – Bank of Thailand (BOT) Governor Sethaput Suthiwartnarueput has stressed the importance of central bank independence in setting monetary policy amid ongoing disagreements with the government over interest rates. While the government has advocated for rate cuts to stimulate short-term growth, the BOT has held firm, arguing that such moves could risk long-term stability by increasing inflation and debt vulnerabilities.
Thailand’s key interest rate has remained at 2.50% for the past year, with the BOT resisting calls for a cut, stressing that structural issues are the primary factors restraining growth. The central bank has warned that reducing rates too soon could lead to speculative risks and debt accumulation, potentially destabilizing the economy over time.
The government is set to roll out its 450 billion baht “digital wallet” scheme later this month. The program will distribute 145 billion baht to vulnerable groups, with each person receiving 10,000 baht to be spent in local communities. While the campaign is expected to inject life into the sluggish economy, economists, including former central bank governors, have raised concerns over its fiscal sustainability.
The BOT expects Thailand’s economy to grow by 2.6% this year, up from 1.9% in 2023, but the debate over interest rate policy and fiscal management continues. The central bank’s next rate review is scheduled for October 16. (NNT)
