Finance Minister Pichai Chunhavajira says he plans to meet with Bank of Thailand Governor Sethaput Suthiwartnarueput on Thursday, in hopes of easing disagreements between the government and the central bank over interest rates.
For months, Prime Minister Srettha Thavisin has been pushing for an interest rate cut, saying it would help the economy. The central bank has not bowed to the pressure, holding its key rate at a decade-high of 2.50%. The next rate review is on June 12.
Since his appointment in a cabinet reshuffle last month, Mr Pichai has downplayed the clash, saying there would be no attempt to replace the central bank’s governor or weaken its independence.
His main aim in talking with the central bank chief, he has said, is to ensure that both economic engines — monetary and fiscal — are working together.
A group representing 300 economists recently spoke out in favour of central bank independence in setting monetary policy. Pursuing an independent monetary policy is vital for economic stability as it prevents the misuse of monetary policy for short-term political goals while keeping inflation in check, the Economic Society of Thailand said.
The group plans a seminar on May 28 on the topic of strengthening the country’s economic structure over the medium and long term.
There has also been speculation that the ruling coalition might seek to amend the central bank law guaranteeing autonomy. However, both Mr Srettha and Mr Pichai have denied any such move is planned.
Mr Sethaput has said that political pressure won’t sway the central bank’s independent interest rate decisions. He also maintains that the country’s economic problems are structural in nature and stimulus alone will not achieve much.