Thailand PM unveils stimulus plans, meets central bank governor after rate hike.

BANGKOK: Thai Prime Minister Sretta Thavisin met with the head of the country's central bank on Monday, less than a week after a surprise interest rate hike that seemed at odds with the government's efforts to stimulate the economy.

Earlier in the day, Sretta confirmed plans to inject 560 billion baht ($15 billion) into the economy next year through his signature digital wallet policy, a key electoral program of his Pheu Thai party.

"We exchanged views on the economy and finance," Sretta, who is involved in real estate and is also finance minister, said in a post on social media platform X, formerly known as Twitter, describing his meeting with the central bank governor. "It was productive and we will hold such meetings on a monthly basis. "

The meeting came after the bank last week raised its key rate to 2.50 percent, the highest in 10 years, while cutting its growth forecast for 2023 to 2.8 percent from 3.6 percent, expecting inflation risks to increase due to new government policies. The bank raised its forecast for 2024 from 3.8 percent to 4.4 percent. Last year, growth was just 2.6 percent.

Sretta has already unveiled measures aimed at boosting short-term growth, starting with lowering electricity prices and lifting visa requirements for Chinese tourists.

Last month, Bank of Thailand Governor Sethaput Suthiwartharueput said there was no need to boost consumption. After raising rates on Friday, he said a pause is appropriate at this point.

All 20 economists in a Reuters poll from Sept.

"Raising rates could slow down the economy as it is a drag on investment," said Punyawat Srising, an economist at Siam Commercial Bank. He added that rates are expected to remain on hold with an inflation range of 1 percent to 3 percent, even if the economy grows at 5 percent.

Some analysts believe that the different approaches of the government and the Bank of Thailand are not contradictory. "The central bank is keen to ensure a stable recovery, while the government wants to get the economy back on track.... both seek growth," said Krung Thai Bank economist Pacharaphot Nuntramas.

The economist also added that the government's approach carries some fiscal risks that need to be managed.

In his live statements on Monday, Sretta reiterated that the government will further reduce electricity prices and triple farmers' incomes in four years, and will also seek new free trade agreements to attract foreign investors. ($1=36.7700 baht)