Government Disappointed With Bank of Thailand’s Decision to Keep Key Interest Rates Steady: A Closer Look at the Controversial Monetary Policy Move

Thailand’s Finance Minister Srettha Thavisin expressed disappointment in the Bank of Thailand’s decision to hold key interest rates steady. The prime minister believes that a rate cut would have benefited the economy, which he believes is in crisis and lagging behind regional peers. He urged the central bank to consider the impact of its decisions on the people and the economy, without pressuring them to act.

The Bank of Thailand maintained interest rates at 2.50% after a vote by its monetary policy committee. Despite pressure from the government, the bank stood firm in its decision, citing the current economic outlook and its potential for growth. Srettha has been openly critical of the central bank’s monetary policy direction, arguing that rate cuts are necessary to address issues such as high household debt and China’s economic slowdown.

Thailand’s economy unexpectedly contracted by 0.6% in the final quarter of 2023, leading to a downward revision in the growth outlook for 2024 by the state planning agency. While the central bank deemed the current interest rate appropriate for the economic outlook, the government projects higher growth at 4% for the year. Despite differences in opinion, both authorities are aiming for economic stability and growth in the coming months.