Thailand’s new finance minister on Tuesday (May 7) downplayed a long-running clash between the central bank and the government over interest rates, saying there would be no attempt to replace the bank’s governor or weaken its independence.
Pichai Chunhavajira, who started his new role on Tuesday, said he had a duty to work with the Bank of Thailand (BOT) over policy coordination and would meet governor Sethaput Suthiwartnarueput to discuss driving fiscal and monetary policies in the right direction.
For months, Prime Minister Srettha Thavisin has been at odds with the central bank, which has refused to bow to pressure to cut rates, currently at a decade high of 2.50 per cent.
Srettha, a real estate mogul, insists he respects the BOT’s independence.
Pichai, a former corporate energy executive and BOT board member, said he saw no disagreement with the central bank and dismissed reporters’ questions about whether its governor would be replaced this year.
“Who will do anything? You asked about what will not happen,” he said, adding there were no plans to change the law that preserves the central bank’s independence.
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“Right now it is already independent,” he said.
“But independence must respond to the needs of the people and to respond to those who work on behalf of the people.”
Pichai’s remarks come just days after the politician daughter of billionaire former premier Thaksin Shinawatra called the BOT’s independence an “obstacle” in resolving economic problems, the latest salvo in an ongoing battle over monetary policy.
Paetongtarn Shinawatra is leader of Srettha’s ruling Pheu Thai party and her comments carry weight in Thailand. Thaksin, a towering figure in Thai politics, is the party’s founder and influential figurehead.
Shinawatra governments have clashed previously with the BOT on rates, with Thaksin going as far as sacking a governor during his first term in office two decades ago.
BOT governor Sethaput last week reiterated the central bank would not bow to pressure and that the current interest rate was appropriate, with a cut likely to give the economy a short-term boost but create longer-term problems.
Pichai did not say when he would meet Sethaput and qualified an earlier comment that interest rates would be on the agenda.
“I will not talk about interest rates but will let the governor think about that himself,” he said. REUTERS
