Thai Finance Ministry Pushes for Interest Rate Cut to Weaken Baht

[webfact]

 

Thailand's Finance Ministry is stepping up efforts to convince the Bank of Thailand (BoT) to lower interest rates in a bid to stimulate the economy and weaken the baht. The Deputy Finance Minister, Paopoom Rojanasakul, stated in a recent interview that a 25-basis point rate cut could be expected either at the upcoming BoT meeting or the following one, hinting at imminent action.

 

The baht currently stands at 33.39 to the US dollar. Mr Paopoom suggests an appropriate level should be around 34.5 to bolster Thailand’s export and tourism sectors. Despite the BoT's consistent maintenance of the key interest rate at 2.5%, the Finance Ministry argues that current low inflation, coupled with a sluggish economy, warrants lower borrowing costs.

 

Prime Minister Paetongtarn Shinawatra's administration, still in its infancy, is taking positive strides to revitalise Thailand's economy, which has suffered an average growth rate of under 2% annually over the past decade. Economic rejuvenation efforts include potentially lowering interest rates, reducing household debt, and countering the strengthened baht's influence on exports and tourism.

Concerns over economic growth have arisen following recent floods, and authorities are considering measures to stimulate consumer spending. Furthermore, the government is reportedly seeking to raise the inflation target from the current range of 1% to 3% to 1.5% to 3.5%. Such a shift would align with the government's strategy of encouraging the BoT to adopt a less restrictive monetary policy.

 

In a related development, the choice of a new BoT chairman remains under scrutiny. Efforts to promote Kittiratt Na-Ranong, a supporter of the ruling Pheu Thai Party and critic of the central bank's current policy, face opposition from some sectors.

 

Proposals to include a politician in the role are met with cautiousness, as former BoT governor Tarisa Watanagase warns of potential detrimental impacts on the economy from government interference. The Finance Minister Pichai Chunhavajira, meanwhile, downplays speculations regarding the appointment of a politician, reported Bangkok Post.

 

Picture courtesy: Thai Rath

 

-- 2024-10-10

 

[ozz1]

Quick high seasons coming we will miss out on money going to other countries bit late for that me thinks most people would have booked their holidays already

[brianthainess]

Please do it at the beginning of NOV, that's when I must transfer my years pension. ........

[Purdey]

The governor of the BOT is an economist. He doesn't have to listen to politicians. 

Funny how Thailand was a famous SEA Tiger and exports grew when the Baht was 25 to the dollar.

[retarius]

Go on BOT....a nice 2% cut to stimulate the economy. 

[RichardColeman]

11 hours ago, webfact said:

Furthermore, the government is reportedly seeking to raise the inflation target from the current range of 1% to 3% to 1.5% to 3.5%.

This government is a total joke - cannot meet your commitments, you move the goal posts, take the credit and enjoy the bonus and congratulations. How about you just sack all the ones getting it wrong ?