Pichai makes peace with BOT, vows to work together in harmony

THURSDAY, MAY 16, 2024

Finance Minister Pichai Chunhavajira has promised that the government would work in harmony with the Bank of Thailand (BOT) in spite of the previous row over interest rate.

After discussions with BOT Governor Sethaput Suthiwartnarueput on Thursday, Pichai said that the government and the central bank agreed on several economic issues and they would work more closely in the interests of society. 

Pichai, who was given the finance portfolio in the recent Cabinet reshuffle, said that their talks revolved around the dispute over interest rate.

He said the BOT and its Monetary Policy Committee hold full authority to analyse and determine the policy interest rate of the country.

Asked if the current interest rate fits the economic reality, he said the BOT should review the current rate, but added, “it has full freedom to make the best possible decision”.

The BOT and the Srettha administration have had disagreements in public over the lowering of the interest rate to foster the economy. The government believes the decade-high current rate of 2.5% hurts people and businesses.

The independence of the central bank became an issue of debate, as the PM claimed it overlooked the people's problems. 

Prime Minister Srettha Thavisin had earlier tasked Pichai to be a mediator between the two sides.

Pichai said a more worrisome issue was the level of non-performing loans and high household debt.

He said the BOT and the government would work together in allowing people access to appropriate sources of funding.

“Large businesses can access various sources of funding, but small businesses and those affected by Covid 19 should be provided funding too. There are still things that can be improved to give these groups access to funding,” he added.

Pichit said that both sides agreed that Thailand’s economic structure needed to be adjusted to increase the Kingdom's competitiveness. 

The minister added that the BOT and the government would likely holds talks again soon.