Thai PM pleads with central bank to reduce policy rate before April

"I would plead with the MPC to schedule an urgent session to consider the interest rate before the next scheduled meeting,” Srettha said. — Reuters

BANGKOK: Thai Prime Minister and Finance Minister Srettha Thavisin has urged the central bank’s Monetary Policy Committee (MPC) to urgently consider reducing the policy rate to prevent the economy from sliding into a “critical stage”, rather than wait until the next scheduled meeting on Apr 10.

“The economic report released by the National Economic and Social Development Council (NESDC) today indicated that Thailand’s economy is at a critical stage,” said Srettha’s post on X on Monday evening.

“The council’s secretary-general also agreed with reducing the policy rate. I would plead with the MPC to schedule an urgent session to consider the interest rate before the next scheduled meeting,” he said.

Srettha’s post came after the NESDC announced that the gross domestic product (GDP) in the fourth quarter of 2023 had expanded by a mere 1.7% year-on-year (y-o-y), falling short of the 2.5% expansion predicted by a Reuters poll.

GDP for the whole year was 1.9% y-o-y, down from 2.5% in 2022. The council also adjusted downwards its estimation for 2024’s GDP from 3.2% to 2.7%.

Earlier on Monday, Srettha told reporters that the 1.9% GDP expansion in 2023 is within the trend of the last decade, during which Thailand’s average growth has been under 2% and falling behind several neighbouring countries.

He also reminded the public that the current government has not used any budget since it was formed in August last year, as the financial 2024 budget bill is expected to be enacted on April 1 at the earliest.

On Feb 7, the MPC voted five-two to hold the rate at 2.5%, almost a 10-year high.

Before the meeting, Srettha had called on the MPC to consider reducing the policy rate by at least 25 basis points, as Thailand has been suffering from negative inflation for four consecutive months.

The MPC is scheduled to meet this year to consider the policy rate, on Feb 7, April 10, June 12, Aug 21, Oct 16 and Dec 18.

The council can, however, convene in a special session outside the schedule to address urgent economic problems. — The Nation/ANN