Bank of Thailand chief rules out more rate cuts

Thailand's current monetary policy is accommodative enough and further interestrate cuts would be less effective in reviving the economy from its pandemic-driven downturn, the outgoing central bank governor said.

While all options, including interest-rate cuts, remain on the table, policies that can get funds to specific sectors "can be more direct and targeted, and more appropriate for the current situation," Governor Veerathai Santiprabhob said in an interview Tuesday with Bloomberg Television's Haslinda Amin.

"The problem now is not so much on illiquidity. I think we have to focus more on insolvency problems that will occur across different sectors and segments of the economy," he said. "The policy rate is already quite low."

Thailand's economy is forecast to suffer one of the biggest contractions in Asia of more than 8% this year, and central bankers are running low on ammunition to deal with the fallout. The Bank of Thailand has brought its benchmark interest rate to a record low 0.5% in three interest-rate cuts this year, and has been on hold since June as it tries to preserve policy space.

Veerathai, 50, will leave the central bank at the end of this month when his fiveyear term ends, handing over to Sethaput SuthiwartNarueput, a member of the monetary policy committee.

While the bank has been studying unconventional monetary policy options such as yield-curve control, Veerathai said Tuesday he doesn't think this is currently necessary.

"We have to assess the situation on a regular basis," the governor said. "If there is steepening of the yield curve to the point that it might affect the economic recovery then the yield curve control might come in."

Veerathai will leave the bank at a time of heightened uncertainty about fiscal policy following the sudden resignation last week of Finance Minister Predee Daochai less than a month into his term. The governor said Tuesday that he's "not ready to take up any position" after some local media reports said he would be approached to replace Predee.