Thai Premier to meet central bank governor after calling for lower interest rates

THAILAND’S Prime Minister Srettha Thavisin said he will meet with Bank of Thailand Governor Sethaput Suthiwartnarueput on Wednesday (Jan 10) to discuss a range of issues, a day after prodding the central bank to consider lowering interest rate.

The two plan to talk about a so-called digital wallet programme proposed by the government to stimulate the economy by handing out 10,000 baht (S$380) each to about 50 million Thais, Srettha told reporters in Bangkok on Tuesday (Jan 9). The risk of corporate bond defaults will also be among the topics for discussion, he said, without specifying if he would press the governor to cut interest rate.

On Monday, Srettha, who is also the finance minister, urged the central bank to lower interest rate in view of a streak of negative inflation readings. He said high interest rate was hurting the economy, especially small businesses and low income groups.

While the Bank of Thailand didn’t respond to the prime minister’s request, the rate-setting panel has hinted at an extended pause to avert any potential shocks to the economy and the financial system amid an uncertain outlook. 

The BOT, which in November halted eight straight interest rate increases, will next review the policy rate on Feb 7. Consumer prices have been in deflation territory for three months through December, with the latest data printing a negative 0.83 per cent, prompting some economists to see rising odds of a rate cut later this year. 

Srettha said the government will push ahead with the digital cash handout with a plan to disburse the money in May. The premier said he will seek to persuade Sethaput on the digital wallet plan – about which the central bank governor has expressed reservations in the past.

SEE ALSO

Digital wallet scheme to be rolled out by May: Thai PM

Thai PM urges central bank to cut rates as inflation very low

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The Council of State, which advises the administration on legal matters, has said the government is well within its rights to go ahead with a plan to introduce a Bill to finance the cash handout programme. The move to borrow money for the programme has triggered a backlash, including from Thailand’s opposition parties, some former central bankers and economists on concerns that the move may widen the fiscal deficit and stoke inflation. 

“We must discuss issues that we disagree about as the situation has changed a lot,” Srettha said. “It’s my duty to persuade him that the situation has changed. It’s normal for people living together to have discussions.”

The premier is aiming to accelerate annual growth in Thailand that has lagged neighbours and averaged below 2 per cent in the past decade, to 5 per cent during his term. Last week, the House of Representatives passed the first reading of Srettha’s US$100 billion budget plan for the fiscal year through Sept 30. BLOOMBERG