Thailand to name Vitai Ratanakorn as central bank chief, reports say

[BANGKOK] Thailand is poised to name veteran banker Vitai Ratanakorn as the next governor of the central bank, local media reported ahead of a Cabinet meeting likely to endorse the appointment.

Finance Minister Pichai Chunhavajira has picked Vitai, president of the Government Savings Bank (GSB), to run the Bank of Thailand (BOT), the Thai-language newspaper Krungthep Turakij reported, citing unidentified government sources. The Thai-language outlet Manager also reported the appointment.

The 54-year-old Vitai is widely seen as a proxy candidate for the Ministry of Finance, with the GSB having spearheaded efforts to provide financial relief to small businesses and households burdened by heavy debt in the post-Covid-19 era. The other finalist in the selection process, Roong Mallikamas, is a deputy governor at the central bank who was widely seen as a continuity candidate.

Vitai’s reported selection may renew concerns about the independence of the central bank, with incumbent governor Sethaput Suthiwartnarueput having resisted government pressure for interest rate cuts and a higher inflation target. The tensions echo similar pressures on central bankers elsewhere, including in the US, where US President Donald Trump has publicly called for deeper rate cuts from the Federal Reserve.

The baht declined 0.3 per cent against the US dollar early Tuesday (Jul 15), while the yield on benchmark 10-year sovereign bonds dropped two basis points.

Sethaput has repeatedly spoken of the importance of central bank independence, and a backlash from former BOT chiefs and economists last year helped thwart a government bid to install its favoured nominee as BOT chairman, a separate role that’s influential in appointments and other matters.

Vitai himself was recently criticised by an ex-BOT governor who said he would not be able to make independent decisions because of his ties to the government.

The banker defended himself in a Facebook post on Jul 8: “My experience and strong self-identify offer the confidence that I can make decisions independently, based on principles. Seeking the best interest of the country is important, without being influenced by any group.”

The next BOT governor faces a challenging economic landscape, including the region’s highest household debt, sluggish credit demand, negative inflation and weakening consumption. Despite a cumulative 75-basis point reduction in borrowing costs since October, growth remains subdued, further threatened by punitive US tariff on Thai exports and a slowdown in foreign tourist arrivals, both critical drivers of the economy.

That’s on top of domestic instability which earlier this month saw a court suspend Prime Minister Paetongtarn Shinawatra from office.

Vitai’s appointment needs to be officially confirmed, but is on the agenda for the Cabinet meeting scheduled for 10 am in Bangkok, Krungthep Turakij reported.

Although interest rates are decided by majority vote, Vitai, as the head of the policy panel, is expected to have a critical influence over their direction. The central bank last month left the benchmark interest rate unchanged at 1.75 per cent, citing the need to preserve limited policy space to respond to future shocks.

More important than central bank rate cuts is the need to ensure commercial banks pass on the reduction to customers, Vitai told local media after applying for the governor’s role. He said the policy rate should be significantly lowered for a sustained period to revive the stagnant economy.

“This is a deep and prolonged downturn, and while interest rate cuts are necessary, they are not enough. Additional supportive measures are required,” the Bangkok Post reported, citing Vitai on Jun 23. BLOOMBERG