Meet Srettha, a man of two formidable titles: the nation’s finance minister and relentless advocate for fiscal prudence. It was in the bustling halls of the Royal Thai Police head office, amidst the fanfare of launching an executive upskilling project, that Srettha shared his economic musings with eager reporters.
“In a territory where inflation whispers rather than roars,” Srettha remarked, “I extend a cordial yet firm invitation to our venerable Bank of Thailand: let’s turn the tide, let’s lower the policy rate.” A statement brimming with conviction, yet tempered by his admission that the reins to the policy rate horse belonged firmly to the central bank’s hands, impervious to the government’s grip.
The air at the Bank of Thailand is thick with contemplation as the Monetary Policy Committee (MPC) convened. With synchrony that would rival any orchestra, late November saw them cast a unanimous vote – the policy rate would remain steadfast at 2.5% per annum. They gather six times a year, like fiscal wizards around a round table, and all eyes are on the calendar as the date of their next meeting looms.
Srettha, not one to shy away from the digital soapbox, took to Facebook on Sunday—his words dripping with critique of the central bank’s refusal to decrease policy interest rates at the MPC’s latest gathering. “The fact that the Bank of Thailand holds the policy lever steady in a time where prices have humbled themselves in negative growth, this does little to kindle the flames of the Thai economy,” he proclaimed in cyberspace.
The latest MPC decision casts our minds back to a pivotal moment on September 27, 2023, when a 25 basis point ascension took the interest rate from 2.25 to 2.5%. Their recent reunion did not birth another hike; the rate remains unchanged. Yet, Srettha, with a keen eye on a struggling populace, appealed for the Commerce Ministry and related institutions to massage the prices of certain agricultural staples—all to avoid an economic recipe for disaster.
“May the Bank of Thailand wrap the common folk in a financial embrace, ensuring the interest rate doesn’t climb a ladder out of sync with the unassuming inflation rate,” Srettha yearned in his digital dialogue.
This financial saga took another twist as some eagle-eyed economists unfurled their wings of criticism, swooping down upon the central bank with the accusation of being passive spectators as the commercial banks luxuriated in the spoils of a high policy rate. Their nests were feathered with 220 billion baht in excessive profits just last year—the bounty of a chasmic gap between deposit and loan rates.
These vigilant economists, armed with ledgers and calculators, are pressing for intervention. They contend that the central bank must step into the ring, ensure commercial banking Goliaths do not stretch the interest rate margins to the detriment of our David—small and medium enterprises languishing in an economic atmosphere still gasping for recovery.