Negative inflation enough reason to lower policy rate, PM tells central bank
Prime Minister Srettha Thavisin has urged the Bank of Thailand (BOT) to consider a policy rate cut of at least 0.25% in their upcoming meeting.
Despite experiencing four months of deflation, Srettha and BOT governor Sethaput Suthiwartnarueput have had differing views on fiscal and monetary policy.
Srettha, who also oversees finance, mentioned that he's aligned with the Finance Ministry's Fiscal Policy Office and asserts that inflation isn't a significant concern, partly due to government oil subsidies.
The Prime Minister contends that controlling manufacturing costs would combat inflation. He believes the actual issue is deflation and advocates for reducing the policy rate to encourage spending and economic recovery.
While the central bank has been keen on maintaining a 2.5% rate, citing effective monetary policy, Srettha sees potential for a rate cut to 2.25%, which would still allow the BOT maneuverability in crises.
The Premier implied that whether the BOT's refusal to lower rates relates to the government's proposed 500-billion baht digital wallet initiative is a topic for media speculation.
However, he remains confident in aligning monetary and fiscal policies. Regarding the digital wallet project, Srettha notes that the responsible committee will proceed with their meeting despite awaiting feedback from the National Anti-Corruption Commission (NACC).
Srettha, who also oversees finance, mentioned that he's aligned with the Finance Ministry's Fiscal Policy Office and asserts that inflation isn't a significant concern, partly due to government oil subsidies.
The Prime Minister contends that controlling manufacturing costs would combat inflation. He believes the actual issue is deflation and advocates for reducing the policy rate to encourage spending and economic recovery.
While the central bank has been keen on maintaining a 2.5% rate, citing effective monetary policy, Srettha sees potential for a rate cut to 2.25%, which would still allow the BOT maneuverability in crises.
The Premier implied that whether the BOT's refusal to lower rates relates to the government's proposed 500-billion baht digital wallet initiative is a topic for media speculation.
However, he remains confident in aligning monetary and fiscal policies. Regarding the digital wallet project, Srettha notes that the responsible committee will proceed with their meeting despite awaiting feedback from the National Anti-Corruption Commission (NACC).
