Central bank ‘ready’ to cut key rate if private consumption dives

The Bank of Thailand (BoT) said on Thursday it was ready to cut key rates if private consumption falls sharply, adding that cutting rates would not help debtors that much.

“If we look at the numbers and private consumption falls sharply and there is a clear change – that is an important factor in considering key rates,” BoT senior director Sakkapop Panyanukul told a local television programme.

Cutting rates would have a long-term negative impact and would only have limited benefits to debtors, he said.

“Any cuts would be small,” he said.

The remarks comes a day after the BoT’s monetary policy committee voted 5-2 to keep the policy rate at a 10-year high of 2.50%. Two members voted for a cut of a quarter percentage point.

Prime Minister Srettha Thavisin, wearing a red shirt to celebrate Lunar New Year, greets reporters at Government House, Bangkok, on Monday. (Photo: Chanat Katanyu)

Prime Minister Srettha Thavisin, also the finance minister, has repeatedly urged the central bank to ease monetary policy, saying small businesses and debtors are suffering at decade-high interest rates. 

Mr Srettha said after the BoT’s announcement on Wednesday that he did not agree with the central bank’s decision.

“I want fiscal and monetary policy to work together, but I have no power to interfere with the central bank’s duties,” he told reporters.