“Different Opinions, But No Conflicts,” Thai Central Bank Governor Says to the Meeting with PM

The clash between Thailand’s head of fiscal and monetary policy continues, as the new Prime Minister Srettha Thavisin promised a raft of stimulus measures for the struggling economy after the pandemic, while the Bank of Thailand (BoT) Governor Sethaput Suthiwartnarueput worries about inflation and exchange rates stability.

The PM’s signature policy, the 10,000-baht digital wallet that is estimated to inject 560 billion baht ($15.06 billion) into the economy. The BoT Governor sees it would increase inflation risks as the higher wages, food and energy prices are already going against Thai economy.


“We had some different opinions, but there is no conflict,” Sethaput said, describing a meeting with the prime minister earlier this week after the surprise rate hike.

“We had a frank discussion and listened to each other,” he told reporters on the sidelines of a business forum.

The BoT Governor also recommended that the fiscal spending should be limited because it would impact the economy, instead urging an improvement in the ease of business and reducing regulations to draw more investment.


Last week, the BoT unexpectedly raised the policy rates to 2.50%. This 10-year high rate is surely to affect the minimum loan rate (MLR) benchmark as the 6.8% to 7.03% range in August, would increase further. Business and consumers that rely on bank loans would carry more monetary cost and would reduce overall output, which is detrimental to the PM’s economic target of the yearly 5% GDP growth.

However, in BoT latest estimation, the GDP would grow only by 2.8% for 2023 and 4.4% for 2024, while last year GDP growth is at 2.6% which is almost half of the target that was set by the PM.


The 2.5% policy rate is expected to combat current inflation and stabilise the weakening Thai baht. As Thailand currently relies on foreign energy imports, the rate hike might help slow down the increasing energy prices.

Nevertheless, the current Thai baht value is over 37 baht per US dollar, which is the weakest and hardly seen after the US QE in 2007 and last October in 2022 when the US FED sharply raised its rate.

The current 5.3% of the US FED policy rate is still double the 2.5% BoT policy rate. This indicates that Thai currency could further weaken if the gap is to be widened, which is also another strong wind against Thailand’s economy.