The governor of Thailand's central bank asserts independence and will not succumb to political pressure.

• Thailand's central bank chief stated on Monday that political pressure will not influence the bank's independent decision-making process regarding interest rates.
• "Governor Sethaput Suthiwartnarueput stated on CNBC's "Street Signs Asia" that "the proof is in the pudding.""
• He stated that the governance framework for that is clear, and the decisions made are based on what is deemed most appropriate for the economy rather than political or other pressures.

Thailand's central bank chief stated on Monday that political pressure will not influence the bank's independent decision-making process regarding interest rates.

"CNBC's "Street Signs Asia" was told by Bank of Thailand Governor Sethaput Suthiwartnarueput that "the proof is in the pudding.""

Although there were calls for rate reductions, the BOT did not act on it "if we weren't operating autonomously," he stated.

"The governance framework for that is quite clear, and the decisions made suggest that they are based on what is deemed most appropriate for the economy, rather than political or other pressures."

Despite government pressure, including from Prime Minister Srettha Thavisin, the BOT kept the key interest rate steady at 2.50% in its latest policy meeting in April.

Lower borrowing costs can stimulate economic growth by encouraging businesses to invest and consumers to spend.

The monetary policy committee expressed concern over high household debt and recognized the significance of debt reduction during the April meeting.

If debt does not contribute to future income or wealth accumulation, the high level of debt outstanding could hinder long term economic growth.

Balancing act

The central bank has been facing a "difficult equilibrium" as it attempts to control the weak economic revival and monetary policy.

He stated that the slow growth is not primarily due to factors affected by interest rates.

The BOT chief stated that the current rate supports the recovery and is aligned with the objective of achieving an orderly deleveraging, which involves balancing the debt burdens for households without encouraging excessive new debt.

The BOT predicts that the Thai economy will grow by 2.6% in 2024 and 3.0% in 2025, thanks to the sustained support of private consumption and tourism.

Sethaput noted that inflation pressures had been subdued in recent months, but "we see inflation gradually picking up and entering our target range of 1% to 3%" by the end of the year.

The governor stated that the uncertain economy is due to structural headwinds, and the shrinking labor force poses demographic challenges that require increasing productivity.

He emphasized the need for more public investment instead of short-term stimulus measures.

Sethaput emphasized the importance of deregulation, particularly in terms of ease of doing business, he said.