BANGKOK (Reuters) -The Bank of Thailand (BOT) said the independent committee selecting its board chairman had delayed its decision by a week on Monday, as former central bank governors warned political interference in monetary policy could weaken the economy.
The government’s nomination of former finance minister Kittirat na Ranong, a ruling party loyalist and staunch critic of the current BOT governor, had sparked some concerns that the central bank’s independence was at risk.
The government has been at loggerheads with the BOT since taking office last year, consistently pressuring the central bank to cut rates and calling for a higher inflation target. The BOT unexpectedly cut rates in October.
In an open letter on Friday, four former central bank governors and other leading economists said they were “deeply concerned” about political nominations for the role, saying it could severely damage long-term stability and growth.
Separately, the BOT on Monday released remarks by Governor Sethaput Suthiwartnarueput at the Bank for International Settlements’ annual conference in June, where he said if independence was eroded, central banks would not be able to deliver on their core mandates.
“Central bank independence in many countries, including Thailand, is being challenged despite having done a reasonable job over past decades,” he said.
The BOT later removed the transcript from its website. It did not immediately respond to a request for comment.
While the BOT chairman does not direct interest rates, they head the panel that chooses policy committee members. The chair will also be involved in selecting the next BOT governor when Sethaput’s term ends in September 2025.
The seven-member selection panel will meet again on Nov. 11 to pick a new chairman. Its decision must be approved by the finance minister, cabinet, and king.
“The committee agreed that more time was needed to consider all aspects of information in order for the meeting to be effective and efficient,” the committee said in a statement published by the central bank.
There are two other candidates for the role, a former permanent secretary of energy and a former university dean, who were nominated by BOT. The law allows the government to nominate one candidate for every two central bank nominees.
“New names can be proposed to replace candidates,” Finance Minister Pichai Chunhavajira said, adding that the role had limited authority.
Pichai, himself a former BOT board member, said delays in the selection would not impact the central bank’s work.
“The decision is up to the committee, but anything that moves the country forward and satisfies everyone will be good.”
Early last month, the committee had extended the assessment period to ensure the thorough screening of candidates.
Prime Minister Paetongtarn Shinawatra, before she became premier, said central bank independence was an ‘obstacle’ to solving economic problems.
The central bank cut its policy rate by 25 basis points to 2.25% on Oct. 16, saying the decision was a ‘recalibration’ of policy and not due to political pressure.
The government last week agreed to keep the inflation rate target range at 1% to 3% for next year.
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