BANGKOK- Thai Prime Minister SretthaThavisin on Monday said the central bank should consider cutting interest rates as inflation was very low, and planned to speak to its governor to urge him to reconsider its policy stance.
Srettha, a real estate mogul and political newcomer, said he was clear in his opposition to rate increases by the Bank of Thailand (BOT), but reiterated its Governor Sethaput Suthiwartnarueput had the power to continue that approach.
“We’ve talked all the time. On raising interest rates, I have a clear stance that I don’t agree with, but he has the power to increase it,” Srettha told reporters.
Inflation was very low, “therefore, there may be a need to consider reducing interest rates”, he said.
The central bank left its policy rate unchanged at a decade high of 2.50 percent in November after raising it by 200 basis points since August 2022 to curb inflation. It will next review policy on Feb. 7.
Headline inflation came in at -0.83 percent in December, making it the eighth straight month that it was outside the central bank’s target of 1 percent to 3 percent .
Late on Sunday on X social media, Srettha said rate hikes had not been good at all for the economy, urging the BOT to avoid moves that would adversely impact low-income families and small businesses.
His government is seeking to spur growth in Southeast Asia’s second biggest economy largely though stimulus and consumer spending, with Thailand trailing regional peers with growth forecast at about 2.4 percent last year, short of the 2022 figure.
“The Bank of Thailand has raised interest rates despite negative inflation for many consecutive months, which is not good for the economy at all and also has an impact on people with low incomes and SMEs,” Srettha said in on X.
He said he hoped the central bank would “help take care of the people by not raising rates in the opposite direction of inflation.
Meanwhile, Thailand has received a green light to borrow to finance its controversial 500 billion baht ($14.29 billion) digital handout scheme, a senior official said on Monday, in a boost to a government eager to stimulate a sluggish economy.
The Office of the Council of State, an independent panel that provides legal guidance to governments, had found no reason that would prohibit borrowing from the state budget to fund the plan, deputy finance minister Julapun Amornvivat said.
