Ruling party loyalist set to chair Bank of Thailand amid rate dispute

A ruling party loyalist and critic of the central bank governor is set to be nominated as the chair of the Bank of Thailand (BoT), as the government seeks to assert influence over the institution amid ongoing disputes over interest rates.

The Pheu Thai Party-led government plans to back 66 year old former deputy premier and Finance Minister Kittiratt Na Ranong for the position. Kittiratt’s nomination has not yet been reported by the media.

During his tenure as finance minister from 2012 to 2014, Kittiratt frequently clashed with the then-central bank governor over monetary policy issues.

In recent months, Kittiratt has supported the current government’s call for a rate cut, aiming to revive an economy that grew by only 1.9% last year.

The BoT raised the benchmark rate to a decade-high of 2.50% just weeks after the populist Pheu Thai Party returned to power in September 2023. Despite repeated calls for easing, the rate has remained unchanged since.

Kittiratt did not immediately respond to requests for comment. The BoT confirmed it had nominated two candidates for the role but declined to disclose their identities. The finance ministry’s permanent secretary also declined to comment.

The final decision on which of the three nominated candidates to appoint will be made by a seven-member panel, independent of the central bank. This decision must then be approved by the finance minister, the Cabinet, and the king.

Although the BoT chair cannot directly dictate the central bank’s interest rate policy, the board they lead is responsible for selecting the monetary policy committee. This committee includes the governor, two deputy governors, and four external experts.

The chair will also have some influence over the selection of the next BoT chief when the current governor, Sethaput Suthiwartnarueput, completes his term in September 2025.

The BoT has maintained that its policy settings are at neutral levels and that the country’s growth is below potential due to structural issues.

Sethaput has argued that, while a rate cut might provide a short-term economic boost, it is not an efficient trade-off given the potential longer-term consequences.

The central bank’s steadfastness in maintaining rates has faced criticism, including from Prime Minister Paetongtarn Shinawatra. In May, the 38 year old PM described the central bank’s independence as an obstacle.

Commerce Minister Pichai Naripthaphan reiterated calls yesterday for the central bank to cut interest rates to increase liquidity, even as the government struggles to stimulate growth in Southeast Asia’s second-largest economy, reported Bangkok Post.

The three nominations for the chair position must undergo qualification checks by the BoT, which should take two weeks, according to the selection committee head Sathit Limpongpan.

“The committee will meet after the reviews and have another meeting to make a decision before the middle of October.”

ORIGINAL STORY: 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.