By Kitiphong Thaichareon and Chayut Setboonsarng
BANGKOK (Reuters) – Thailand’s finance minister said he had met the central bank governor on Thursday and discussed the issue of high household debt and the need for liquidity, as he made another pitch for a rate cut to spur revival of a sluggish economy.
Lowering rates would help increase liquidity and help those who are creditworthy to access new loans as they recover, Pichai Chunhavajira said after emerging from a meeting with Bank of Thailand chief Sethaput Suthiwartnarueput that lasted nearly two hours.
“We want to see more liquidity and the BOT is in agreement,” he said, adding financial institutions in Thailand were risk adverse.
The BOT in August held key interest rates at a decade-high of 2.50% for a fifth straight meeting, so far resisting calls from the government for a rate cut.
Pichai said monetary easing would help improve credit access. He did not say what the BOT governor said of interest rates during the meeting.
The central bank declined to comment on what was discussed as its next monetary policy review is on Oct. 16.
Thailand’s economy, Southeast Asia’s second-biggest, has recovered from the pandemic only slowly and is lagging regional peers, shackled by a slowing manufacturing sector and stubbornly high levels of household debt.
Its household debt to GDP ratio was 89.6% at the end of the second quarter, or 16.3 trillion baht ($506.53 billion), among the highest levels in Asia.
The finance ministry and central bank will meet again this month to discuss the inflation rate target in more detail, Pichai added.
Thailand’s inflation target range of 1% to 3% is reviewed annually with agreement from the BOT and Finance Ministry before cabinet approval by the end of the year.
The meeting, plans for which were first reported by Reuters, follows months of government pressure to cut rates and align with fiscal policy aimed at stimulating the economy.
Pichai expects an agreement over inflation target this month with 2024 inflation coming in under 1%.
The two also discussed global events that triggered capital inflow, resulting in baht’s recent rally, he said.
Fourth quarter exports should do well, despite the strong currency, he added.
Thai exports, a key engine of the economy, are expected to grow 2% this year, but the baht’s rally is posing the a big challenge for the rest of the year, businesses said.