Thailand’s central bank governor Sethaput Suthiwartnarueput sees no need for an emergency meeting to cut interest rates, saying that a premature monetary easing poses a risk to financial stability, according to a Nikkei report.

The governor’s remarks in his interview with Nikkei came after Prime Minister Srettha Thavisin sought an urgent rate cut from the central bank to help boost demand in an economy struggling with below 2 per cent growth. Srettha said on Monday that the next scheduled policy meeting in April is too far away.

Reducing borrowing costs won’t solve the structural and cyclical problems in the domestic economy while increasing financial stability risks given that household debt is above 90 per cent of gross domestic product, the report cited Sethaput as saying. While Thailand’s recovery is weak, it’s continuing, the governor told Nikkei, dispelling Srettha’s observation that the economy is in a crisis.

The Thai premier, who also oversees the finance ministry has been at odds with the central bank on the approach to revive South-east Asia’s second-largest economy since taking power six months ago. He ramped up the rate-cut pressure on the Bank of Thailand earlier this week after data showed that 2023 GDP growth was weaker than expected, extending a decade of sub-2 per cent expansion.

The central bank has raised the one-day repurchase rate by a total of 200 basis points during a yearlong tightening cycle that boosted borrowing costs to a decade high of 2.5 per cent. It stood pat in the last two meetings, with policymakers saying they will remain data dependent, that the recent bout of deflation was temporary and that the BOT will weigh growth data as well.

Srettha’s weekslong campaign for a rate cut is the most overt bid by a Thai prime minister to influence monetary policy since 2013 when Yingluck Shinawatra’s administration pressured the BOT governor then to cut rates. In 2001, then PM Thaksin Shinawatra fired the central bank governor after the official defied his call for higher interest rates.

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Sethaput, in the Nikkei report, described his relationship with the premier as professional and cordial and attributed the tensions between them to the fact that they wear different hats. The central bank isn’t dogmatic about the policy rate, Sethaput was quoted as saying in the Nikkei report. BLOOMBERG