4-5-2024 (BANGKOK) The influential daughter of Thailand’s former Prime Minister Thaksin Shinawatra has waded into an ongoing spat over interest rates, labelling the central bank’s independence an “obstacle” to resolving the nation’s economic challenges. Paetongtarn Shinawatra, leader of the ruling Pheu Thai party, fired this latest salvo on Friday (May 3) amid a simmering row between the government and monetary policymakers.
“The law that keeps the Bank of Thailand (BOT) independent from the government is a problem and a significant obstacle in fixing economic problems,” Paetongtarn told party members, taking aim at the central bank’s autonomy.
Her remarks come against the backdrop of Prime Minister Srettha Thavisin’s persistent calls for a cut in interest rates, currently at a decade-high of 2.50%. Srettha maintains this level is crippling small businesses and undermining government efforts to revive an economy he deems to be in crisis, though he insists he respects the BOT’s independence.
Paetongtarn, widely tipped as a potential future leader of Thailand, lamented that the BOT’s monetary policy “refuses to understand and cooperate”, hampering efforts to reduce the nation’s high debt levels.
The central bank declined to comment on her statements when approached by Reuters.
However, its governor stood firm earlier this week, asserting the BOT would not bow to pressure. In an interview with CNBC, he defended the current interest rate as appropriate for the economy, arguing any short-term boost from a cut would be “not an efficient trade-off” when weighed against potential unintended long-term consequences.
Paetongtarn’s comments carry significant weight in Thailand’s political landscape, with her father Thaksin the billionaire figurehead of the Pheu Thai party that has dominated elections for the past two decades, winning all but one poll. During his first term as premier, Thaksin famously sacked the central bank governor over monetary policy disagreements.
The former leader remains an influential force in Thai politics despite a dramatic return from 15 years of self-exile last August to face charges of conflicts of interest and abuse of power. After six months in detention, he was released on parole in February, though he claims to have retired from politics.
