BOT could help Thais by reducing policy rate: Srettha

Srettha, who is also the nation’s finance minister, said he has been in constant dialogue with senior Bank of Thailand executives and has expressed his stand against retaining the high policy rate.

However, he conceded that the power to decide whether to raise or lower the policy interest rate lies with the central bank and the government could not directly interfere.

Srettha was speaking to reporters at the Royal Thai Police head office after chairing the opening ceremony kicking off a project to upskill senior executives in government agencies.

“The inflation rate has been very low, so I would like to send a message to the central bank to consider lowering the policy rate,” Srettha said.

The Monetary Policy Committee (MPC) of the central bank voted unanimously in late November to retain the policy interest rate at 2.5% per annum.

The MPC meets six times yearly to review the policy rate, with the next meeting scheduled on February 7.

On Sunday, Srettha posted to Facebook a strong criticism of the central bank for not lowering the policy interest rate at the MPC’s most recent meeting.

“The fact that the Bank of Thailand increased the policy rate even thought the inflation rate had been negative for several consecutive months does not bode well for the Thai economy, but does affect lower-income people and small and medium enterprises,” Srettha posted.

The MPC decision harks back to a September 27, 2023 increase of 25 basis point, raising the interest rate from 2.25 to 2.5% per annum. They did not hike it further at the latest meeting, but chose to keep it at 2.5%.

“So, I would like the Commerce Ministry and other ministries concerned to appropriately adjust the prices of certain agricultural crops. Some may have too low prices,” Srettha added in his Sunday post on Facebook.

“And I hope the BOT would take care of the people by not raising the interest rate in contrast to the low inflation rate.”

Srettha’s post followed an outcry from some economists, who accused the central bank of doing nothing to rein in commercial banks, which are are reaping the benefits of a high policy interest rate.

The economists lambasted the central bank after it was reported that commercial banks gained excessive profits of 220 billion baht last year, mainly due to a wide spread between the deposit and loan interest rates.

The economists said the central bank should have taken action to ensure that the commercial banks did not allow the interest rate margin to grow to the detriment of SMEs, which continue to struggle due to the economy not yet having recovered.