Thai cabinet picks Vitai Ratanakorn as next central bank chief
The appointment of Vitai, 54, the president and CEO of the Government Savings Bank, would be subject to royal approval before he starts a five-year term on October 1. He was picked over central bank veteran and deputy governor Roong Mallikamas.
Vitai would succeed Sethaput Suthiwartnarueput, who has reached retirement age. The cabinet approval for Vitai was announced by government spokesperson Jirayu Huangsap.
The Bank of Thailand's next governor faces a big challenge with an economy shackled by tepid consumption, weak lending, stubbornly high household debt and steep U.S. tariffs.
Vitai has a master's degree in finance from Drexel University in the United States, as well as degrees in economics and law from Thailand's Chulalongkorn and Thammasat universities.
Some analysts expect his appointment to improve the working relationship of the central bank and the Pheu Thai party-led government, which has previously clashed with Sethaput over interest rates and monetary policy settings.
"There should be no issue of conflict," said Natapon Khamthakrue, an analyst at Yuanta Securities.
"Vitai's approach is likely to be more relaxed compared to someone from the central bank, but making significant adjustments within the central bank might not be easy due to existing regulations."
However, Natapon cautioned that "there needs to be careful consideration to avoid the perception of excessive government interference".
Last year, Prime Minister Paetongtarn Shinawatra, before she was premier, said central bank independence stood in the way of solving economic problems.
In a social media post earlier this month, Vitai said he has acted independently and without influence from any groups in his career, prioritising the public interest.
Last month, he said there was a need to cut interest rates deeply to support a stagnant economy.
The central bank late last month left the key interest rate unchanged, underlining the need to save some policy ammunition after three cuts from October that brought the key rate to 1.75%, the lowest in over two years. The next rate review is August 13.
Kobsidthi Silpachai, head of Capital Markets Research at Kasikornbank, said Vitai should help coordinate monetary policy with government policy.
Finance Minister Pichai Chunhavajira said the same, adding the top priority should be solving Thailand's debt issues.
"The most urgent and biggest issue is debt," he told reporters.
"Regarding monetary policy, the central bank has independence, but it must work to support policies that align with driving the economy and government policy."
Chamadanai Marknual, an economist at Krungthai Bank, said the new governor would likely uphold the central bank's independence and as an outsider, Vitai could push for more preemptive policy.
"Having someone who has never worked at the central bank before may have an outside-in perspective," Chamadanai said.
"There is very limited room for fiscal measures, so adopting relaxed policies might be the right answer."
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Independent
22 minutes ago
- The Independent
Trump claims he's made a ‘massive' trade deal with Japan
President Donald Trump boasted Tuesday that he had made a 'massive' deal with Japan that would generate 'thousands of jobs' and billions of dollars for the U.S. The president announced the trade framework – 'perhaps the largest Deal ever made' – in a Truth Social post Tuesday, revealing that a 15 percent tax on goods imported from Japan had been agreed. In the post Trump said Japan would invest 'at my direction' $550 billion into the U.S. and would 'open' its economy to American-made vehicles as well as 'rice' and 'other things.' But further details remained scant. The 15 percent tax on imported Japanese goods is a significant drop from the 25 percent rate that Trump, in a recent letter to Japanese Prime Minister Shigeru Ishiba, said would be levied starting on August 1. 'This Deal will create Hundreds of Thousands of Jobs — There has never been anything like it,' the president posted on Truth Social, adding that the United States 'will continue to always have a great relationship with the Country of Japan.' 'This is a very exciting time for the United States of America, and especially for the fact that we will continue to always have a great relationship with the Country of Japan. Thank you for your attention to this matter!' Early Wednesday in Tokyo, Japanese Prime Minister Shigera Ishiba confirmed the new trade agreement, saying it would benefit both sides and help them work together. 'The government was determined to protect national interests,' Ishiba told reporters, per the Wall Street Journal. Trump's announcement appeared to excite investors, with the benchmark Nikkei – the Tokyo stock market – climbing 2.6 percent to its highest in a year, with shares of automakers also surging. Toyota grew by more than 11 percent, with Honda and Nissan both up more than 8 percent. But American automakers were less buoyed with the deal, with concerns raised over low import levies from Japan, compared to tariffs on imports from Canada and Mexico remaining at 25 percent. Matt Blunt, head of the American Automotive Policy Council, said, "Any deal that charges a lower tariff for Japanese imports with virtually no U.S. content than the tariff imposed on North American-built vehicles with high U.S. content is a bad deal for U.S. industry and U.S. auto workers.'
Reuters
22 minutes ago
- Reuters
Japan's Nikkei surges to one-year peak, bonds slide on US trade deal
TOKYO, July 23 (Reuters) - Japanese automakers led a surge in the Nikkei share average to a one-year peak on Wednesday, while bonds slid after Tokyo reached a trade deal with Washington, ending a months-long stalemate. The Nikkei (.N225), opens new tab rallied as much as 3.3% to 41,070.91, its highest since July last year. The Tokyo Stock Exchange's transport equipment index (.ITEQP.T), opens new tab soared 10.3%, with Toyota Motor (7203.T), opens new tab surging more than 13%. The trade deal reduced economic uncertainty, bolstering the case for the Bank of Japan to resume raising interest rates. Traders sold Japanese government bonds, pushing two-year yields up by 7 basis points (bps) to 0.82%, the highest since April 2, when U.S. President Donald Trump shocked markets with his aggressive "Liberation Day" tariff announcement. Markets largely shrugged off a media report that Japanese Prime Minister Shigeru Ishiba would step down by the end of August. Ishiba is facing growing opposition from within his Liberal Democratic Party for his vow to stay in power despite the ruling coalition's defeat in Sunday's upper house election. The yen was last down about 0.2% at 146.96 per dollar . Trump said on Tuesday the U.S. and Japan had struck a trade deal that includes a 15% tariff that will be levied on U.S. imports from the Asian country, down from a threatened tariff of 25%. Industry and government officials briefed on the agreement said the deal also lowers the tariff to 15% from 25% on Japanese autos, which account for more than a quarter of the country's exports to the U.S. "It is commendable that the 25% baseline tariff was avoided," said Norihiro Yamaguchi, senior Japan economist at Oxford Economics in Tokyo. "Lowered uncertainty will be welcomed in the equity market." Bank shares gained, sending the TSE's banking index (.IBNKS.T), opens new tab up 4.5%. The 10-year JGB yield jumped 9.5 bps to 1.595%, matching last week's 17-year high. Ten-year Japanese government bond futures tumbled as much as 1.04 yen to 137.56 yen, their lowest since March 28. Deputy BOJ Governor Shinichi Uchida said the central bank needs to focus on downside risks to the economy. His comments came ahead of a BOJ policy meeting next Wednesday and Thursday. "I don't think this (trade deal) alone will lead to a Bank of Japan rate hike next week, but the possibility of a rate hike between September and October has increased," said SMBC chief currency strategist Hirofumi Suzuki. "This will create pressure to buy the yen."
Reuters
22 minutes ago
- Reuters
South Korea to scrutinise US-Japan trade deal as officials fly to Washington
SEOUL, July 23 (Reuters) - Seoul will take a close look at the terms of a U.S.-Japan trade deal, South Korea's industry minister said on Wednesday, holding out the prospect of greater cooperation in the energy and industrial sectors ahead of key trade talks in Washington. Japan competes with South Korea in areas such as autos and steel, so Tokyo's trade deal will pile pressure on Seoul to reach a similar level of 15%, or better, by an August 1 deadline to avert reciprocal U.S. tariffs of 25%. The new finance ministry and the top trade envoy of Asia's fourth-biggest economy are set for high-level trade talks with U.S. counterparts in Washington on Friday. "Investors see the Japan-U.S. deal as a benchmark for the Korean deal," said Kim Sung-rae, an analyst at Hanwha Investment & Securities, adding, "The deal would put pressure on Korean negotiators to come up with a similar, or better, deal." South Korea's benchmark KOSPI (.KS11), opens new tab index edged down 0.3% on Wednesday, but shares in automakers and suppliers rallied after the Japan-U.S. deal. Hyundai Motor ( opens new tab rose 6.8% and Kia ( opens new tab jumped 6.4%. New President Lee Jae Myung has said Seoul wanted to avoid a comparative disadvantage with other countries in trade deals. "It will be difficult for South Korea to have U.S. tariff rates lower than 15% on Japan and 10% on Britain," said Kim Yong-jin, a management professor at Sogang University. Seoul needed to import more farm goods and energy, as well as boost investments, as Japan had done to reach a similar outcome, he added. South Korea will exclude the opening-up of its rice and beef markets as a bargaining chip in the Washington talks, instead considering more U.S. imports of crops for fuel, such as corn for bioethanol, the Yonhap News Agency said. "We will make an all-out effort to produce a positive sum result that will allow Korea-U.S. industrial and energy cooperation to be upgraded to the next level," Industry Minister Kim Jung-kwan said in a statement. Since the result could have a significant economic impact, South Korea would respond thoroughly while closely considering the sensitivity of its industry, he added. He will meet U.S. Commerce Secretary Howard Lutnick and Energy Secretary Chris Wright, among others, he told reporters before boarding a plane to Washington for the talks. In a post on Truth Social, U.S. President Donald Trump said Japan would boost market access for American producers of cars, trucks, rice and certain agricultural products, among others. The deal's tariff of 15% on all Japanese imports is down from a proposed 25%, with Trump adding that it would include $550 billion of Japanese investments in the United States. Last week, South Korea's Chosun Ilbo newspaper said the United States had asked Seoul in talks this month to set up a large-scale investment fund to support the reconstruction of its manufacturing industry, without identifying a clear source.
