THAILAND’S economy would have benefited from a cut in key interest rates, Prime Minister Srettha Thavisin said on Thursday (Apr 11) in a response to the Bank of Thailand’s (BOT) decision to hold interest rates steady.

Srettha has been at loggerheads with the central bank for months, urging it to cut rates that are at a decade high of 2.5 per cent to try to drive an economy he insists is in crisis, and lagging regional peers.

“The independence of the central bank should not be independent of the suffering of the people,” Srettha told reporters, adding that he did not want to pressure the central bank.

The BOT’s monetary policy committee on Wednesday voted five-to-two to hold rates at 2.5 per cent, as it did in the last meeting on Feb 7, resisting months of government pressure to cut rates. The next rate review is on Jun 12.

“Most academics agree that it is time to cut rates, it would help exports, tourism and help the economy ... everybody would benefit,” Srettha added.

Political newcomer Srettha, who is also the country’s finance minister, has disagreed openly with the BOT since last year over the direction of monetary policy, repeatedly saying that rate cuts will help as the economy confront high household debt and China’s slowdown.

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South-east Asia’s second-largest economy unexpectedly shrank 0.6 per cent in the final quarter of 2023 from the third.

This prompted the state planning agency to cut its 2024 growth outlook to between 2.2 per cent and 3.2 per cent from the 2.7 to 3.7 per cent earlier projected.

Growth was 1.9 per cent in 2023, slower than expected and less than the 2.5 per cent growth in 2022.

The BOT said the current interest rate was appropriate for Thailand’s economic outlook and did not hinder growth.

On Wednesday, the central bank revised down 2024 GDP forecast to 2.6 per cent from 2.5 to 3 per cent. However, the government projects 4 per cent growth this year. REUTERS