Bank of Thailand to appoint new chairman amid government push

The Bank of Thailand (BoT) board is set to appoint a new chairperson by early October, as announced by the head of the selection committee. This move comes as the government aims to exert more influence over the central bank following a prolonged public dispute over interest rates.

Although the BoT chairperson does not have the authority to set interest rates, the board they lead is responsible for appointing the monetary policy committee. This committee includes the BoT governor, two deputy governors, and four external experts.

The Pheu Thai Party, which came into power last year, has consistently urged the BoT to reduce its key interest rate—a request that has not been fulfilled. Paetongtarn Shinawatra, who assumed the role of prime minister last month, has previously expressed that the BoT’s independence is a barrier to economic recovery.

Sathit Limpongpan, the head of the selection committee stated that the criteria and qualifications for the position have been set, and the finance ministry and central bank will send in names.

According to the existing rules, the Ministry of Finance will nominate one candidate, while the central bank will propose two names to replace Porametee Vimolsiri. These nominations will undergo qualification checks by the BoT, followed by a selection committee meeting in late September or early October to decide on the new board chairperson.

The candidate must receive approval from the finance minister, after which their name will be forwarded for Cabinet approval and royal endorsement. Sathit added that his committee would also appoint two new board members.

Government cooperation

Porametee, whose second term concludes this month, was appointed in 2018 by the Prayut Chan-o-cha administration, which also selected the current BoT Governor, Sethaput Suthiwartnarueput.

Sethaput has indicated that the bank can cooperate with the government and is prepared to adjust policy if necessary.

Despite government pressure to ease monetary policy, the BoT has maintained its benchmark interest rate at a decade-high of 2.50%, affirming that this level aligns with its growth and inflation outlook. The central bank, scheduled to review rates on October 16, has reiterated its readiness to adjust policy if required.

Finance Minister Pichai Chunhavajira and Sethaput will convene this month to initiate discussions on an inflation target for 2025. The government is seeking a new target with the intention of a rate cut, given that inflation is below the target range.

The existing inflation target range of 1% to 3% has been effective in anchoring inflation expectations and managing price shocks, according to minutes from the BoT’s policy meeting on August 21, reported Bangkok Post.