The delay in a selection of the next Bank of Thailand (BOT) governor adds to the existing political uncertainty in the nation. This choice carries significant implications for Thailand’s monetary policy, especially concerning interest rates and economic growth.
Two main contenders for the top job are BOT Deputy Governor of Corporate Development Roong Poshyananda Mallikamas and veteran banker Vitai Ratanakorn. Mrs. Roong, a career central banker, is widely perceived as representing continuity from the current governor, Sethaput Suthiwartnarueput, who has resisted government pressure for lower interest rates.
In an exclusive interview with Bloomberg, Mrs. Roong has indicated that, if appointed, she would be more proactive in communicating the trajectory for interest rates. She emphasizes the need for greater effectiveness of policy tools due to limited resources, stressing that this requires closer collaboration and a cohesive, coordinated direction between monetary and fiscal policies.
Furthermore, Mrs. Roong supports the BOT’s current accommodative policy stance, which has seen 75 basis points of rate cuts since October. She believes monetary policy must be supportive and act as an anchor of stability during uncertain times, cautioning against introducing additional uncertainties. Mrs. Roong also plans early engagement with diverse stakeholders to avoid confrontation and foster mutual understanding.
In contrast, Vitai Ratanakorn has publicly advocated for lower borrowing costs and also supports coordinated fiscal and monetary policy to help revive the faltering economy. As president and CEO of the Government Savings Bank, he has been instrumental in state efforts to provide financial relief, and his perceived closeness to the Finance Ministry has raised questions regarding the central bank’s independence.
Thailand’s economy is grappling with sluggish growth, lagging behind its Southeast Asian peers. Challenges include high household debt, a three-quarter contraction in total loans, and the threat of higher U.S. tariffs on its export-reliant economy. The benchmark SET Index is currently among the world’s worst-performing stock markets.
While economists anticipate further rate cuts of 50 to 75 basis points this year, the central bank’s Monetary Policy Committee, under Mr. Sethaput, has stressed the importance of preserving limited policy space for future shocks.
