Central bank pressured again to lower interest rate

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BANGKOK, May 7 – Deputy Prime Minister/Finance Minister Kittiratt Na-Ranong has renewed pressure on the Bank of Thailand (BoT) to reduce the policy interest rate.

He told the cabinet today that he has asked for an update from the BoT on lowering the benchmark rate despite the BoT insistence that the measure would not deter foreign capital inflows.

The central bank described the interest rate as a minor element leading to a stronger baht but the Finance Ministry disagreed, saying foreign investors link the appreciating baht to the high interest rate – the factor attracting them to invest in Thailand.

Mr Kittiratt said he has asked the BoT about the progress on its four measures to tackle the baht rise which it earlier reported to the cabinet, adding that the BoT has not put any of the measures into effect so far.

Prime Minister Yingluck Shinawatra said the cabinet assigned Mr Kittiratt to coordinate with the BoT and the Monetary Policy Committee (MPC) to find macro solutions to the country’s economic problem.

She refused to comment on the performance of the BoT governor.

The government sets policy but implementation decisions belong to the independent central bank and its Monetary Policy Committee, the prime minister said. “We cannot interfere,” she said.