Thai Government Discussing Ways to Exert More Control Over Central Bank, Sources Say

Thai Prime Minister Srettha Thavisin’s administration is considering ways to increase control over the country’s central bank, the Bank of Thailand, in the midst of ongoing disagreements over economic policy. Sources familiar with the matter have revealed that discussions are underway regarding the role of the BOT’s board chairman, which is set to open up in September.

While the chairman does not have the authority to dictate monetary policy, they do play a key role in evaluating the performance of the BOT governor and influencing the composition of the Monetary Policy Committee. Potential candidates for the chairman position include Kittiratt Na-Ranong, a former finance minister, and Supavud Saicheua, a vocal critic of the central bank.

The current BOT board chairman, Porametee Vimolsiri, was appointed by the previous military-led government, along with the current Governor Sethaput Suthiwartnaruep. The government is reportedly planning to push for a new governor in 2025 who aligns more closely with its economic views.

The ongoing disagreements between Srettha and Sethaput on economic strategies have led to tensions, with the government advocating for rate cuts to stimulate growth, while the central bank emphasizes structural reforms. This clash has prompted calls for a review of the BOT’s inflation target and raised concerns among investors about political interference in monetary policy.

The potential move to exert more influence over the central bank has already impacted Thailand’s financial markets, with foreign investors pulling out billions of dollars from stocks and bonds. Analysts warn that undermining the BOT’s decision-making processes could lead to capital outflows and hinder long-term economic stability.

Despite the pressure from the government, the BOT is expected to maintain its policy rate at the upcoming meeting in June. Economists are pushing back their calls for rate cuts, citing the risks of political interference in monetary policy.

As the government explores ways to stimulate the economy through fiscal measures, such as a digital wallet program, concerns remain about political uncertainty and the potential impact on economic recovery efforts. The ongoing power struggle between the government and the central bank highlights the challenges facing Thailand’s economic policy in the coming months.