Thai government nominates ex-finance minister for central bank board chair, sources say

The Thai government will nominate a ruling party loyalist and critic of the central bank governor for chair of the Bank of Thailand, seeking to assert influence on the institution amid a protracted rift over interest rates, according to two sources.

The Pheu Thai Party-led government is backing 66-year-old former deputy premier and finance minister Kittiratt Na Ranong for the post, said the sources, who have direct knowledge of the matter. Kittiratt's nomination has yet to be reported by media.

As finance minister from 2012-2014, Kittiratt wrangled frequently with the then central bank governor over monetary policy.

In recent months, he has backed the current government's demands for a rate cut, as it seeks to revive a stuttering economy that grew just 1.9% last year.

Just weeks after the populist Pheu Thai returned to power in September 2023, the BOT raised the benchmark rate (THCBIR=ECI) for an eighth straight meeting to a decade-high of 2.50%, where it has since remained, despite repeated calls for easing.

Kittiratt did not immediately respond to a request for comment, while the BOT said it had nominated two candidates for the job but declined to disclose them. The permanent secretary of the finance ministry declined to comment.

The decision on which of the three nominated candidates to appoint will be made in the coming weeks by a seven-member panel, independent of the central bank, and must be approved by the finance minister, cabinet and king.

The BOT chair cannot direct the central bank's interest rates policy but the board they head selects the monetary policy committee, comprising the governor, two deputy governors and four outside experts.

The chairman will also have some influence on the selection of the next BOT chief when the incumbent, Sethaput Suthiwartnarueput, completes his term in September 2025.

RATES ROW

The BOT has said its policy settings were at neutral levels, and that growth was below potential because of structural issues.

Sethaput has maintained that, while a rate cut could give a short-term lift to the economy, it was not an efficient trade-off for the longer-term unintended consequences it could have.

The BOT's refusal to budge on rates has drawn criticism, including from Pheu Thai's leader Paetongtarn Shinawatra, elected prime minister last month, who described the central bank's independence as an "obstacle" in May.

On Monday, Commerce Minister Pichai Naripthaphan again called on the central bank to cut interest rates to increase liquidity, even as the government struggles to jumpstart growth in Southeast Asia's second-largest economy.

The three nominations for chair are subject to qualification checks from the BOT, which should take two weeks, said selection committee head Sathit Limpongpan.

"The committee will meet after the reviews and have another meeting to make a decision before the middle of October," he told Reuters.

Porametee Vimolsiri, the current BOT board chairman who is serving his second term, was appointed in 2018 by former Prime Minister Prayuth Chan-ocha's government, which also picked Governor Sethaput.