Bangkok Battles for New Central Bank Governor Amidst Political Fury
Thailand is embarking on a search for a new central bank governor, potentially signaling a significant shift in the country’s monetary policy. The selection process, announced by Finance Minister Pichai Chunhavajira, will begin in March. It aims to replace Governor Sethaput Suthiwartnarueput, whose five-year term ends in September. This transition occurs at a critical juncture for the Thai economy, marked by ongoing debates about interest rates and the central bank’s independence.
Mr. Suthiwartnarueput, a 60-year-old former World Bank economist who assumed the governorship in 2020 under a military-backed administration, is ineligible for a second term due to reaching retirement age. His tenure has been characterized by staunchly defending the central bank’s autonomy, particularly against pressure from the populist Pheu Thai party government, which took office in 2023. He consistently resisted calls for interest rate cuts, frequently emphasizing the global importance of central bank independence in public addresses.
The selection process is unfolding against a backdrop of recent political maneuvering surrounding appointments to the central bank’s board. Mr. Chunhavajira’s announcement coincided with the government’s nomination of Somchai Sujjapongse, former permanent secretary for finance, for the position of Bank of Thailand chair. This follows a controversial, ultimately unsuccessful, attempt last year to appoint Kittiratt Na-Ranong, a Pheu Thai Party loyalist and former finance minister, to the same role. That nomination sparked significant opposition from hundreds of economists and several former central bank governors concerned about potential government interference.
While the Bank of Thailand chair doesn’t directly influence monetary policy decisions, the position holds considerable power. The chair leads the board responsible for selecting four members of the monetary policy committee, which also includes the governor and two deputy governors. This committee significantly impacts interest rates and other crucial aspects of monetary policy. Therefore, the government’s nominations have drawn considerable media attention and scrutiny, especially given its frequent clashes with the central bank over monetary policy and its repeated calls for rate reductions. The government, however, insists it respects the central bank’s independence and denies exerting undue pressure.
The selection process for the chair is also underway. The government may nominate one candidate, while the central bank may nominate two. A selection committee, headed by Sathit Limpongpan, is expected to choose a candidate by February 28th. The upcoming selections of both the chair and the governor will shape the future trajectory of Thailand’s monetary policy. The chosen individuals will face the challenging task of navigating the complex economic landscape while upholding the central bank’s independence amidst ongoing political pressures. These appointments will be closely watched by domestic and international observers as indicators of the government’s commitment to maintaining the central bank’s autonomy and its approach to managing the Thai economy in the coming years.
