Daughter of Thai heavyweight Thaksin calls c.bank independence an ‘obstacle’ – Business

BANGKOK (Reuters) – The daughter of Thailand’s influential former Prime Minister Thaksin Shinawatra said on Friday the central bank’s independence was an “obstacle” to solving economic problems, the latest salvo in an ongoing row over interest rates.

Paetongtarn Shinawatra, the leader of the ruling Pheu Thai party, has been waging a dispute since last year between Prime Minister Srettha Thavisin and the central bank, which has refused to bow to his continued pressure to cut interest rates.

“The law that keeps the Bank of Thailand (BOT) independent from the government … is a problem and a significant obstacle in solving economic problems,” Paetongtarn told party members.

Srettha maintains an interest rate of 2.50% at a decade high, hurting small businesses and hampering government efforts to revive an economy he says is in crisis. Srettha insists he respects the BOT’s independence.

Paetongtarn, who has been tipped as Thailand’s potential leader, said the BOT’s monetary policy “refuses to understand and cooperate” and would hamper efforts to reduce high debt.

The central bank declined to comment on Paetongtarn’s comments when contacted by Reuters.

The governor said Monday that the BOT will not bow to pressure. He told CNBC that current interest rates are appropriate for the economy and that any short-term boost a rate cut could provide is “not an efficient trade-off” when weighed against the longer-term unintended consequences.

Paetongtarn’s comments carry weight in Thailand, where her father Thaksin is the billionaire figurehead of a party that has long dominated politics and won all but one election in the past two decades.

During his first term, Thaksin dismissed the central bank governor over disagreements over monetary policy.

He remains a prominent figure in Thailand and made a dramatic return home in August after 15 years in self-exile, where he faced prison for conflict of interest and abuse of power. He was released on parole in February after six months in custody and claims he has retired from politics.