BANGKOK – The Prime Minister insisted that Thailand cut interest rates and claimed that he is willing to talk to and persuade the BoT Governor to reconsider for the fourth or fifth time after he has yet to hear the governor acknowledge people’s suffering.
Prime Minister and Finance Minister Srettha Thavisin was asked on Thursday about Bank of Thailand (BoT) Governor Sethaput Suthiwartnarueput’s interview with NIKKEI Asia, in which he confirmed that there will be no rate cuts despite pressure from the government.
The Prime Minister said he understood that it was the Governor’s right to take such a decision, but it was his duty to explain to him the suffering of the people. He emphasized that while the government does not exercise direct control over the BoT, he believes that both parties respect each other.
BoT Governor Sethaput talked with Nikkei Asia in Bangkok on February 21 denying the economy is in a ‘crisis.’ He claims that monetary easing will neither boost spending on tourism or export demand. He underlines that reversing monetary policy will not solve the structural and cyclical problems affecting Thailand’s economy.
The PM stated that the three points mentioned by the Governor did not address the problem of the people. He emphasized that the suffering of the people is important and he wants the Governor to take this into consideration. He believes that fiscal and monetary policies can work together to help the people, and he hopes that further discussions can be held.
“I have made my request and I insist that I have grounds for doing so. As for the three factors mentioned that are hindering the Thai economy, namely oil prices, Chinese tourists and the slow disbursement of the budget, I believe these issues are already being discussed. We are trying to encourage China to import more Thai products and get more Chinese tourists to spend money in our country.
As for the high cost of transportation, Mr. Suriya is working to make transportation cheaper so that more money goes into people’s pockets and they can spend more. As far as the budget is concerned, everyone knows that we have a policy to boost the economy, which was originally supposed to be implemented in May, but now it is more like April. All parties are working on this issue.”
Asked about the government’s three previous signals for a rate cut, which were not answered, the prime minister said he would continue to make the demand even if it took a fourth or fifth time. He believes that people in a developed society have different opinions and can discuss them without conflict. He emphasized that the government will continue to discuss and convince the BOT with arguments and evidence even if its demand has not yet been met.
The Prime Minister also pointed out that the current interest rate of 2.5 percent still leaves room for maneuver and that even a crisis will not prevent the government from implementing various policy measures. He mentioned that the deputy governor of the BOT had previously told him that people with bank deposits will look for riskier investments with higher returns if interest rates are lowered.
However, he emphasized that the government cares more about the people at the grassroots level and urged the governor to consider the people in other dimensions as well.
On the governor’s concerns that lowering interest rates too soon could hurt household debt, the prime minister said household debt was already high and people could not afford to pay higher interest rates. He added that unpaid interest would only add to the debt burden.
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