Thai king endorses Vitai’s appointment as central bank chief

[BANGKOK] Thailand’s King Maha Vajiralongkorn has endorsed the appointment of Vitai Ratanakorn as the nation’s new central bank governor, more than two weeks after the Cabinet picked the seasoned banker for the coveted role.

The royal endorsement caps a monthslong selection process that has been overshadowed by concerns over government attempts to erode the autonomy of the Bank of Thailand. Vitai is set to take office from Oct 1, according to a Royal Gazette notification issued on Sunday (Aug 10). Incumbent governor Sethaput Suthiwartnarueput is due to complete his five-year term on Sep 30.

Vitai, president of the government Savings Bank, was chosen by the Cabinet on Jul 22 over fellow finalist and BOT Deputy governor Roong Mallikamas.

The 54-year-old is seen as a proxy candidate of the Finance Ministry. The state-owned government Savings Bank under Vitai has led government efforts to provide financial relief to small businesses and households who borrowed heavily during the pandemic.

Vitai has publicly favoured significant cuts to the central bank’s policy rate for a sustained period to revive the stagnant economy. In contrast, Sethaput resisted government calls for lower borrowing costs and a higher inflation target.

Although interest rates are decided through a majority vote by the seven-member Monetary Policy Committee, Vitai is expected to have influence over its direction as the head of the panel. He will chair the Monetary Policy Committee for the first time on Oct 8.

The next scheduled meeting of the committee is on Wednesday, with the majority of economists in a Bloomberg survey expecting a 25 basis point cut in the benchmark rate to 1.5 per cent.

Thailand’s consumer price index fell 0.7 per cent in July, marking the fourth straight month of deflation and the steepest contraction in 17 months. That opens up room for the central bank to add to a total of 75 basis points in cuts since October. BLOOMBERG