Thailand’s Financial Chessboard: Pheu Thai Government Moves to Shake Up Bank of Thailand’s Monetary Policy

A week has passed since the publication of the official policy ofMiss Pae Thongthan Shinawatra, Prime Minister There are movements from the side of the government that send signals to “The Central Bank of the country” The aim is for the Bank of Thailand (BoT) to help drive the economy through “monetary policy” Lead to the economic goals that the government has set, which is to stimulate the economy to expand as much as possible.

In the government’s view, the success of the government’s economic goals cannot be driven by fiscal policy alone but must also be supported by monetary policy.

The government’s signal to the Bank of Thailand began last week with the news of the appointment of a new BoT board chairman to replace Mr Pramethi Wimonsiri, whose term in office ended this month.

A news report from the Ministry of Finance revealed the list of candidates to sit as the chairman of the board. The new BoT includes: Mr. Kittirat Na Ranong, former Deputy Prime Minister and Minister of Finance Former Chairman of the Prime Minister’s Advisory Committee (Settha Thavisin) who has worked in politics, Mr Kittirat plays an important role in Thai Pheu Party in terms of economic policy. He is a former deputy leader of the Thai Pheu Party. and former chairman of the Thai Pheu Party’s economic strategy committee So, Mr Kittirat’s name was nominated to sit as chairman of the board. The new BoT cannot deny that he is a person sent by the political department to sit in this position.

In the past, the ideas that Mr. Kittirat has expressed an opinion about the work of the BoT. There are many issues, such as expressing an honest opinion about policy interest rates being too high. he also mentioned the use “Independence” Too much creates trouble and damage. to a wide range of people

In this regard, with the government sending Mr Kittirat to sit as chairman of the BoT board, we must continue to keep an eye on what steps are taken after this, especially in matters relating to the resolution of business debt. and public debt Including government policy to drive the economy in the next period.

Government-Bank of Thailand There is a difference between interest rates.

As well as sending people to apply for the position of chairman of the BoT board, giving an opinion on policy interest rates Including the issue of inflation. Two ministers from the Pheu Thai Party also expressed views that were clearly related to the BoT.

The Trade Minister intends to negotiate with the National Bank to resolve the problem of the strong baht.

Meanwhile, the issue of the strong baht has been questioned by people on the government side, including the Bank of Thailand on this issue as well. Mr Pichai Naripthaphan, Minister of Commerce He gave an interview to reporters that he would like to see the Bank of Thailand reduce policy interest rates. and make sure the baht value doesn’t become too strong too In order to reduce overall costs and take care of exporters

The current value of the baht at 33 baht per dollar is considered too strong. In just one month, it rose 5-6%, greatly affecting exporters. I ask the Bank of Thailand to speed up the correction. Because it will affect exports, especially agricultural products that already have a low profit margin.

“I am not an enemy of the Bank of Thailand. But in the past, competing countries’ currencies were weak but ours were not. I believe it is not correct. I will make an appointment to discuss with the Governor of the Bank of Thailand. to understand I want the Bank of Thailand to reduce interest rates quickly and take care of the baht so it doesn’t get too strong. and it must increase liquidity for small and medium-sized businesses The National Bank must not only carry out supervisory duties. But it must also help support economic growth. Because monetary policy is even more important than fiscal policy. We don’t want to see Thailand as South America where people are poorer. There is no money to come out to rob, so we have to make sure that everyone can live happily,” said Mr Pichai.

The Ministry of Finance is meeting with the Bank of Thailand to adjust the inflation framework.

While the movement of the Ministry of Finance has called for The BoT is considering lowering the policy interest rate said Mr. Pichai Chunhavajira, the Deputy Prime Minister and Minister of Finance, in the case of the Federal Reserve of the United States to cut interest rates by 0.25% on Wednesday last As for Thailand, although the BoT will be independent But from an academic point of view Thailand will have to consider monetary policy if a powerful country like the United States announces a cut in the interest rate. Because Thailand’s economy is quite connected to the United States.

Every time the United States increases or decreases interest rates, it will have a significant impact on the flow of capital into and out of Thailand. If the US increases interest rates, it will cause the baht to weaken. And if interest rates are lowered, the baht will strengthen.

At the moment, the baht is strong. It comes from many factors. from the improving economy Combined with an increase in foreign capital inflows. and the trend of foreign direct investment (FDI) that will flow in. There must be many aspects to consider. Both for value for money Future inflation trends too.

Regarding the issue of the inflation framework between the Ministry of Finance and the Bank of Thailand (BoT), there will be a meeting to discuss. From the office of the Ministry of Finance I believe that the situation is improving today. When the government announces a clear policy Building back confidence Reflected by the recovery of the capital market. Therefore, in general, it is considered an appropriate time to accelerate economic growth a little more, which requires moving inflation to an appropriate rate.

This is the latest move by a government led by the Pheu Thai Party which has launched an offensive targeting the Bank of Thailand, the agency that oversees the country’s monetary policy.

It remains to be seen whether the government will convince BoT as an administrator “Monetary Policy” Come and support “Fiscal policy”How much government property and reactions from the other side What will the BoT be like? When the political side sends a clear message to the central bank that it wants independence in its work. and deciding on monetary policy

which is the latest governor The BoT has also reaffirmed the importance of central bank independence. Including considering whether or not to reduce Thailand’s interest rates. That doesn’t necessarily take into account Fed interest rate increases or decreases.