PM and BOT head meet, reiterate past comments
With two important government institutions—the elected government and the independent Bank of Thailand—at odds over how high the official interest rate should be at the moment, their leaders met on Monday to talk it out.
The decision to meet underlined that the government understood the importance of the relationship between the two institutions.
Prime Minister Srettha Thavisin and the Bank of Thailand (BOT) Governor, Sethaput Suthiwartnarueput, reportedly discussed the ongoing rise in interest rates, which has been a major concern for both businesses and consumers. The BOT has boosted interest rates five times since May 2022 in an effort to combat inflation.
At the meeting, the Prime Minister told the governor of his concerns about the impact of rising interest rates on the economy. He said the government is committed to supporting economic growth and added that the government wants to work with the BOT to find a balance between controlling inflation and supporting growth.
Governor Sethaput replied by assuring the Prime Minister that the BOT is committed to working with the government to achieve its economic goals. The BOT, he said, would continue to monitor the situation closely and to adjust its policies as needed.
The meeting between the Prime Minister and the BOT governor was seen by some as a positive indication of the relationship between the two institutions. It suggested that the government and the BOT are committed to working together to address challenges facing the Thai economy.
However, according to some media pundits, a look at recent history suggests the rift between this prime minister and this BOT governor is not a new thing. The two men have been at odds for some time, and the tension has been growing in recent months.
The latest round of clashes can be traced back to May 2022, when the BOT raised interest rates for the fifth time in a row. That hike was intended to combat inflation, which was rising at a record pace.
Srettha was reportedly unhappy with the rate hike, and criticised the BOT for not doing enough to support economic growth. He also called on the BOT to be more transparent about its decision-making process.
Sethaput responded by emphasising the BOT’s independence and arguing that the rate hikes were necessary to control inflation. He also softened the message by assuring critics that the BOT was committed to working with the government to achieve its economic goals.
The rift between the two men has been exacerbated by the current threats to the economy. Thailand faces a number of challenges, including inflation, rising interest rates, and the war in Ukraine.
As the head of government, Srettha is under pressure to address these challenges, and so is looking for someone to blame. He has accused the BOT of being too slow to raise interest rates, and also said that the BOT is not doing enough to support economic growth.
Sethaput has defended the BOT’s record, insisting the BOT is doing everything it can to address the challenges facing the Thai economy.
It is unclear how the rift between Srettha and Sethaput will be resolved. However, it appears clear that the tension is growing, and it could have a significant impact on the Thai economy.
