The Thai government has appointed former Finance Minister Kittiratt Na-Ranong as the new chairman of the Bank of Thailand (BOT), a move seen as a bid to exert tighter control over the central bank, with whom it has clashed over monetary policy and inflation targets, Bloomberg reports.
Kittiratt, a vocal critic of the BOT’s hawkish monetary policy and a former member of the ruling Pheu Thai party, was selected after a nearly five-hour meeting of the selection panel on Monday. While the chairman doesn’t directly influence policy, the position holds significant sway over the Monetary Policy Committee, with the ability to influence membership and assess the performance of the governor.
Kittiratt’s appointment comes as Prime Minister Paetongtarn Shinawatra’s government continues to pressure the central bank for rate cuts, even after it surprised markets last month with the first rate reduction since 2020.
Kittiratt has publicly criticized the BOT for not lowering rates to stimulate growth in the past, particularly during his time as economic advisor to former Prime Minister Srettha Thavisin and during his tenure as Finance Minister in 2013.
Economists believe Kittiratt’s appointment increases the likelihood of further rate cuts, with Nomura Holdings Inc. suggesting a possible 25 basis point cut in December.
The appointment has met with opposition from former central bank chiefs and economists who argue that choosing a political representative for the BOT chair could damage economic stability, prioritizing short-term political interests over long-term economic goals.
The government and the BOT have been at odds over the best approach to boosting Thailand’s economy, which has lagged behind its Southeast Asian neighbors in recent years. While the government favors a lower interest rate to complement its expansionary fiscal policies, the central bank has maintained a more cautious stance.
The decision comes after Prime Minister Paetongtarn, daughter of former Prime Minister Thaksin Shinawatra, publicly labeled the BOT’s autonomy as an “obstacle” to the government’s economic objectives. Her administration has enacted a larger budget and distributed cash aid to vulnerable groups to address the cost of living crisis.
While the BOT successfully defended its inflation target for next year at 1% to 3% last month, it agreed to the Finance Ministry’s request to employ a broader range of policy tools to support the economy and closely monitor baht movements.
