New Bank of Thailand Governor Prioritises Household Debt Relief in First Media Briefing

Vitai Ratanakorn, the newly appointed Governor of the Bank of Thailand (BOT), held his inaugural media briefing on Friday, outlining his policy priorities with a strong emphasis on tackling household debt and maintaining economic stability.

 

In his first public address since assuming office, Vitai stressed that the central bank would continue its core mission of preserving long-term economic and financial stability whilst working more closely with the public and society.

 

"The most important thing is that we must ensure the public, SMEs, society, and the business sector receive positive benefits," Vitai said, acknowledging that household debt remains a principal concern for the BOT.

 

A key announcement concerned the establishment of an Asset Management Company (AMC), which Ratanakorn said should be finalised by the end of October before commencing operations in early 2026.

 

The initiative, being developed jointly by the Ministry of Finance, the BOT, and the Thai Bankers' Association, initially aims to assist 2-3 million retail debtors with non-performing loans below 100,000 baht.

 

This includes approximately 700,000 accounts from commercial banks, 800,000 from non-bank subsidiaries under commercial banks, and roughly 700,000 from state-owned banks.

 

However, the BOT later emphasised that specific details and formats remain under discussion and may be subject to adjustment before a joint announcement is made.

 

 

 

Policy Space Remains Despite Low Interest Rates

Addressing monetary policy concerns, Vitai acknowledged that Thailand's policy rate of 1.5% is already amongst the lowest globally. However, he maintained that the central bank retains policy space to reduce rates further if necessary.

 

"Can we reduce it if needed? Yes, we can," he stated, adding that any rate cuts would be accompanied by targeted measures to address specific issues affecting households and small and medium-sized enterprises.

 

 

 

Deflation Concerns Under Close Watch

The governor addressed growing concerns about deflation, noting that core inflation has remained at 0.9% whilst headline inflation has been negative for six consecutive months.

 

He clarified that whilst the BOT is monitoring the situation closely, Thailand has not yet entered a deflationary state in the economic sense.

 

"Deflation in economic terms means that the price level of goods and services decreases broadly and must result from clearly weak demand," Vitai explained. "Core inflation is at 0.9%, meaning there is still demand support, nearly at one. But it has decreased because of oil, energy prices, and fresh food, which together account for nearly 50%."

 

He emphasised that the central bank stands ready to ease monetary policy further if necessary to support the economy or maintain inflation within the target range.

 

 

Policy Priorities Focus on Financial Development

Vitai outlined several key policy priorities for his tenure, including continuing financial sector development to prepare for global trends in digitalisation and environmental sustainability.

 

This includes initiatives such as the "Your Data" project, developing efficient and secure digital payment systems, and establishing a Virtual Bank.

 

 

The governor also pledged that the BOT would work more closely with the public, listening to societal perspectives to inform policy decisions whilst improving communication with citizens.

 

Specific measures under consideration include debt relief for vulnerable groups, increasing SME access to credit through more efficient and flexible guarantee mechanisms, implementing risk-based pricing for loan interest rates, and reviewing financial service fees to ensure fairness.

 

 

No Plans for Sovereign Wealth Fund

Addressing speculation about establishing a sovereign wealth fund, Vitai firmly stated that he has no such plans, noting that it would not affect the baht's exchange rate as the BOT's reserves are already invested abroad.

 

"If we were to establish one, it would require using new baht to buy dollars for management, which would affect the exchange rate by creating demand for dollars and selling baht," he explained. "Since those reserves are already in foreign currency, mainly dollars, establishing a sovereign wealth fund to help weaken the baht would not be theoretically correct."

 

 

Gold Trading and Exchange Rate Management

On the topic of gold trading and its impact on the baht, Vitai said the BOT is monitoring the situation and consulting with banks and gold shops about potential measures.

 

He emphasised that trading gold in US dollars, rather than baht, could help reduce pressure on the exchange rate, though no specific measures have been announced.

 

The governor concluded by expressing his intention to hold regular briefings with the media, dubbing the initiative "Governor Connect," to maintain open dialogue and ensure better understanding of central bank policies.