Prasarn Trairatvorakul
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Thai central bank meets to decide on interest rates

The Bank of Thailand is set to meet on Wednesday to discuss monetary policy.

The decision to reduce interest rates or not has been the subject of intense debate, causing a rift between the government and the central bank.

Finance Minister Kittiratt Na-Ranong has called on the central bank to cut the borrowing rate by at least 0.5%, but Thailand's central bank governor has argued that any decision will be guided by economic data and will not yield to outside pressure.

Thailand's economy has recently lost steam, with exports and growth falling in the first quarter. This is due in part to do the strength of the Thai baht against other currencies, which has hurt exports.

The government supports higher spending - giving subsidies for car and rice purchases - in a bid to kick-start demand. But the central government has taken the opposite view on the need to maintain fiscal discipline.

The BBC's Jonathan Head reports.

  • 29 May 2013