Thai government and central bank clash over interest rates

The ongoing discord between government officials and central bankers regarding interest rate adjustments is creating uncertainty for local banks and could potentially trigger further foreign investor withdrawals.

Thailand Prime Minister Srettha Thavisin, along with key advisors, is advocating for a reduction in rates by the Bank of Thailand (BoT) to stimulate an economy the Thai PM describes as being in a state of crisis. However, the central bank remains hesitant to reverse an eight-quarter-point increase cycle, which has raised the rate to its highest since 2013. This disagreement is negatively impacting the share prices of banks including Krung Thai Bank, Kasikornbank, and Bangkok Bank, which are already grappling with a surge in non-performing loans.

Government officials argue that banks are exploiting high rates to overcharge customers. The 61…