PM pleads with central bank to reduce policy rate before April
Prime Minister and Finance Minister Srettha Thavisin on Monday evening urged the Bank of Thailand (BOT)’s Monetary Policy Committee (MPC) to hold an urgent session to consider reducing the policy rate immediately to prevent the Thai economy from sliding further into a “critical stage”, rather than wait until the next scheduled meeting on April 10.
“The economic report released by the National Economic and Social Development Council (NESDC) today indicated that Thailand’s economy is at a critical stage,” said Srettha’s post on X on Monday evening.
“The council’s secretary-general also agreed with reducing the policy rate. I would plead with the MPC to schedule an urgent session to consider the interest rate before the next scheduled meeting,” said the premier.
Srettha’s post came after the NESDC announced that the gross domestic product (GDP) in the fourth quarter of 2023 had expanded by a mere 1.7% year on year, falling short of the 2.5% expansion predicted by a Reuters poll.
GDP for the whole year was 1.9% year on year, down from 2.5% in 2022. The council also adjusted downwards its estimation for 2024’s GDP from 3.2% to 2.7%
Earlier on Monday, Srettha told reporters that the 1.9% GDP expansion in 2023 is within the trend of the last decade, during which Thailand’s average growth has been under 2% and falling behind several neighbouring countries.
He also reminded the public that the current government has not used any budget since it was formed in August last year, as the fiscal 2024 budget bill is expected to be enacted on April 1 at the earliest.
On February 7, the MPC voted 5:2 in favour of holding the rate at 2.5%, which is almost at a 10-year high. Prior to the meeting, Srettha had called on the MPC to consider reducing the policy rate by at least 25 basis points as Thailand has been suffering from negative inflation for four consecutive months.
The MPC is scheduled to meet six times this year to consider the policy rate, on February 7, April 10, June 12, August 21, October 16 and December 18. The council can however convene in a special session outside the schedule to address urgent economic problems.
