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Thailand Says Policy Committee Won’t Interfere With Central Bank

Thailand Says Policy Committee Won’t Interfere With Central Bank

(Bloomberg) -- Thailand said a planned policy-coordination committee comprising Finance Ministry and central bank officials won’t interfere with the workings of the monetary authority.

“They have their own work and power,” Finance Minister Uttama Savanayana told reporters Friday in Bangkok. “We won’t interfere with that.”

Thailand plans to set up a joint panel with officials from the Finance Ministry, Bank of Thailand and other agencies to ensure monetary and fiscal policies are synchronized. Uttama’s comments appear intended to counter concern that the panel imperils the central bank’s independence, as officials grapple with a sharp slowdown in the economy.

The panel members will share information, and economic agencies need to work together as global challenges intensify, Uttama said, adding the committee will be established soon.

Deputy Prime Minister Somkid Jatusripitak announced the plan for the coordinating panel on Thursday, a day after the Bank of Thailand unexpectedly cut its benchmark interest rate for the first time since 2015, to 1.50% from 1.75%.

‘Storm Ahead’

“Fiscal and monetary policies must work hand in hand,” Somkid told reporters on Friday. “They need to work closely and systematically as there is a storm ahead.”

Thailand’s exports and tourism reliant economy has weakened amid a surging currency and the fallout of the U.S.-China trade war. Business lobbies and even the country’s industry minister have called for more steps to restrain the exchange rate.

The baht’s 8% appreciation against the dollar in the past year is the strongest in a basket of emerging-market currencies tracked by Bloomberg.

The Bank of Thailand said in a statement Friday the rise in foreign-exchange reserves reflects its management of the baht but that it needs to be cautious to avoid criticism that it’s manipulating the currency. The reserves have reached a record of $219.1 billion.

To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net

To contact the editors responsible for this story: Sunil Jagtiani at sjagtiani@bloomberg.net, Margo Towie

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