Thailand’s Prime Minister asks the central bank to cut borrowing costs, citing difficulty in recovering from the pandemic and declining consumer prices.
Prime Minister Urges Central Bank to Cut Borrowing Costs
Thailand’s Prime Minister, Srettha Thavisin, is calling on the central bank to consider reducing borrowing costs to bolster the economy. This signals a disconnect between fiscal and monetary policymakers as the prime minister seeks to stimulate growth and consumer spending. The recent drop in consumer prices and prolonged deflation provide an opportunity for the central bank to ease monetary policy, which has been tightened through interest rate increases negatively impacting small and medium enterprises and low-income groups, according to the Prime Minister.
Slow Economic Recovery and Call for Rate Cuts
Thailand’s economy has struggled to recover from the pandemic, prompting the prime minister to push for faster growth targeting 5%. The call for rate cuts comes amid ongoing negative consumer price readings, indicating the potential for easing monetary policy.
Disagreements and Economic Outlook
Despite the current decline in consumer prices, the Bank of Thailand has been hesitant to consider easing, attributing the drop to state subsidies. The prime minister argues that further rate increases are unnecessary and that cutting interest rates could be justified due to low inflation, causing the Thai baht to drop. Additionally, the World Bank forecasts Thailand’s potential economic growth to be the lowest in the ASEAN region over the next 20 years, contributing to tensions between the prime minister and the central bank.
Source : Thai PM urges the Bank of Thailand to cut interest rates
