Central bank independence being challenged in many countries, BoT governor says

The independence of central banks is being challenged and they have come under more pressure lately than at any time in the past decade, the Bank of Thailand chief said, according to a speech transcript released on Monday.
“Central bank independence in many countries, including Thailand, is being challenged despite having done a reasonable job over past decades,” Governor Sethaput Suthiwartnarueput said in remarks made at the BIS annual conference in Switzerland, an undated transcript of which the BoT released on Monday.
“If we allow central bank independence to be eroded, we will not be able to deliver on our core mandates,” the governor said.
The conference took place on June 28, according to the BIS website, which on Wednesday published a paper with transcripts of remarks by several central bank governors, including Mr Sethaput, at the event.
The BoT later on Monday removed the transcript from its site. It did not immediately respond to a request for comment.
The comments were delivered at a time when the BoT had clashed with the government over monetary policy, with the central bank until last month coming under near-daily pressure to cut interest rates to help spur growth.
The BoT unexpectedly cut its benchmark rate to 2.25% in October, but has since stressed that it was not embarking on an easing cycle and said the move was a “recalibration” and not a caving to political pressure.
Former BoT governors last week expressed their concern that a candidate for the role of central bank board chairman had “close political ties”, widely seen as referring to the government’s nominee, a critic of the current governor.
The government has maintained it respects the BoT’s independence, but wants it to do more to help it revive the economy, growth of which has been tepid.
The BoT on Monday said the decision on a candidate had been delayed until next week, the second time it has been postponed. Finance Minister Pichai Chunhavajira said the role had limited authority and the delay would not impact the central bank’s work.
In the remarks at the conference in Switzerland, Mr Sethaput also said unconventional policies such as expanding balance sheets and pervasive crisis measures had expanded central banks’ footprints in private markets and raised expectations on what a central bank can achieve.
“It results in not just moving the goalpost but also adding more goalposts. As expectations increase, it becomes harder to ring-fence our reputation, credibility and the case for central bank independence,” he said.