Satit Limpongpan, chairman of the selection committee tasked with choosing the new board chairman of the Bank of Thailand, has confirmed the position will not have any influence on the central bank's monetary policy.
He said under the amended Bank of Thailand Act of 2008, the board chairman has no authority to interfere with the policies of the regulator's three policymaking committees -- the Monetary Policy Committee (MPC), the Financial Institutions Policy Committee, and the Payment Systems Committee -- which all operate independently.
On Monday, the selection committee approved a new chair, but did not reveal the candidate's name.
Former commerce minister Kittiratt Na-Ranong is widely rumoured to be the choice, despite opposition from various groups.
Mr Satit said under the law, it is not easy for the government to dismiss the central bank's governor.
Removal can only happen under two conditions: serious misconduct or corruption, or significant damage to the performance of duties or inefficiency.
Regarding the grounds for dismissal, Mr Satit said current central bank governor Sethaput Suthiwartnarueput is not at risk because he has not met either of the conditions.
Limited role
Mr Satit clarified the board chairman also has no authority in the selection of a new central bank governor.
Furthermore, the board chairman has no role in managing the country's international reserves, with the bank's executives responsible under international reserve management regulations.
"While these regulations can be amended, I don't think the government would amend them because it would provoke significant societal concerns," he said.
Mr Satit said all three candidates for board chairman are qualified and capable. While each has previous experience in politics or political parties, they all resigned from any such affiliations over a year ago, in accordance with regulations.
"We are in the process of appointing the new board chairman, so I cannot disclose the name at this time. For the panel meeting on Monday, it was a secret vote of each committee member," he said, adding the secretary of the selection committee is scheduled to submit the meeting report to the Finance Ministry on Nov 19.
The Finance Ministry proposed Mr Kittiratt, former commerce minister and advisor to former premier Srettha Thavisin, as a candidate.
The two other candidates, nominated by the central bank, are Kulit Sombatsiri, former energy permanent secretary, and Surapon Nitikraipot, president of the Thammasat University Council and an independent director of PTT Plc.
Brokerage outlook
Rakpong Chaisuparakul, senior vice-president of KGI Securities (Thailand), said given Mr Kittiratt's longstanding preference for monetary easing, investors are watching to see if the new board chairman will advocate for further interest rate cuts by the MPC as well as the potential use of Thailand's international reserves.
KGI analyst Suchot Tirawannarat said investors are curious about the monetary policy direction under the new board chairman.
"We need to see whether the new chairman will affect central bank policy," said Mr Suchot.
"If monetary policies are eased, it would benefit the Stock Exchange of Thailand [SET]."
Krungsri Securities said banking stocks, especially Bangkok Bank (BBL), Krungthai Bank (KTB) and TMBThanachart Bank (ttb), are likely to face negative sentiment following Mr Kittiratt's appointment as board chairman.
This appointment is still viewed as positive for the SET and stocks that usually benefit from lower interest rates, such as Gulf Energy Development, telecom player Advanced Info Service, and Muangthai Capital in the leasing business, according to the brokerage.
"Stocks sensitive to fiscal and monetary policy shifts, such as high-debt sectors like power plants as well as high-yield leasing, are likely to gain as Mr Kittiratt's role may signal a closer alignment of fiscal and monetary policy between the Finance Ministry and the Bank of Thailand," noted Krungsri Securities.