Photo Credit: SCB EIB
Thailand should take a more assertive approach in reducing borrowing costs amid sluggish economic growth and muted inflation, according to Somprawin Manprasert, a candidate for the next Bank of Thailand governor.
Somprawin suggested that the central bank could lower its benchmark interest rate — currently at 1.75% — by 75 to 100 basis points. Speaking in an interview in Bangkok, he emphasized the need for the BoT to clearly signal a rate-cutting cycle to loosen tight financial conditions and encourage commercial banks to pass on the benefits to borrowers.
“With GDP growth projected at just 1.5%–1.8% this year and inflation remaining within target, it is reasonable to argue for rate cuts to ease financial conditions and prevent further economic decline,” said Somprawin.
His views align with the government’s push for lower interest rates to stimulate growth. However, they stand in contrast to those of outgoing BoT Governor Sethaput Suthiwartnarueput, who has argued that there’s limited room for additional easing following 75 basis points in cuts since October — the first consecutive rate reductions since 2020.
A former chief economist at SCB Economic Intelligence Center, Somprawin is one of seven candidates vying to replace Sethaput, whose five-year term ends on September 30. Candidates will present their policy vision to an independent selection panel on June 24.
Other contenders include Vitai Ratanakorn, president of Government Savings Bank; Kobsak Pootrakool, senior executive at Bangkok Bank; and Roong Mallikamas, deputy BoT governor. Finance Minister Pichai Chunhavajira has stated that the next central bank chief should be forward-looking, modern, and supportive of government initiatives.
Somprawin said that further rate cuts would help boost economic growth and alleviate the debt burden for households and small-to-medium-sized enterprises (SMEs). Prime Minister Paetongtarn Shinawatra’s government has also called for lower interest rates and made reducing household debt a policy priority.
Sethaput, who was appointed by the previous military-backed administration, has often been at odds with the current Pheu Thai-led government. He resisted rate cuts and calls to raise the inflation target but eventually eased rates as economic threats grew, including from US trade policies.
Somprawin, who holds a master’s degree in economics and finance from the University of Warwick and a PhD from the University of Maryland, said maintaining strong foreign exchange reserves is critical to prevent economic issues from spilling into the financial sector.
He also advocated for reducing reliance on the US dollar by increasing transactions in other currencies that align with Thailand’s trade patterns.
Looking ahead, Somprawin acknowledged the challenges facing the next BoT governor, stressing the need for collaboration among policymakers to effectively support the Thai economy.
“Right now, every sector must come together to support the country’s economic recovery,” he said.
