Bank of Thailand and PM at odds again following disappointing Q4 growth

Prime Minister Srettha Thavisin called for a cut in interest rates, citing public hardship, as the current rate of 2.50% is the highest in a decade.

• Thailand’s fourth-quarter economic growth of 1.7% fell short of analysts’ forecasts, with a 0.6% contraction from the previous period.
• The Bank of Thailand viewed the weak economic data as expected, but Prime Minister Srettha Thavisin called for a cut in interest rates to alleviate public hardship.
• The current interest rate in Thailand is 2.50%, the highest in a decade, prompting calls for a 25 basis points reduction by the Prime Minister.

Prime Minister Pushes for Special MPC Meeting

Prime Minister Srettha Thavisin has urged the Monetary Policy Committee (MPC) to call a special meeting to review its decision to maintain the policy rate at 2.5%, without waiting until its next scheduled meeting on April 10. His appeal comes after the release of economic performance figures by the National Economic and Social Development Council (NESDC), which indicate a critical stage for the Thai economy.

PM Calls for Policy Rate Cut

During a media briefing following the NESDC report, Prime Minister Thavisin emphasized the need for a policy rate cut of at least 25 basis points to 2.25%, in order to ease the financial burden on the population. He highlighted Thailand’s below-average GDP growth and the downward revision of GDP by economic forecasting institutions to support his position.

NESDC Secretary-General’s Response

NESDC Secretary-General Danucha Pichayanan, responding to the Prime Minister’s appeal, stated that he was not under pressure to urge a policy rate review. He believes that the central bank should consider other financial issues in addition to the policy rate, including credit card interest rates and spreads between lending and deposit rates.