Kasikorn Research Center expects the MPC meeting on August 4 to maintain interest rates at 0.5% amid rising economic risks.
On August 2, 2021, Kasikorn Research Center assessed that At the Monetary Policy Committee (MPC) meeting on Aug. 4, the MPC will consider keeping the policy rate at 0.50% to support economic recovery amid rising risks from spread of covid-19 Amid the epidemic of delta species As a result, the epidemic tends to be more difficult to control.
while due to the rapidly increasing number of infected people As a result, the Thai public health system faces more limitations. It is expected that the government will need to renew more stringent epidemic control measures. These factors will affect the business sector and employment. and has a continual impact on purchasing power and consumer confidence to deteriorate. Therefore, accommodative financial measures are still needed to support the economy in parallel with additional fiscal measures.
in which the MPC meeting Up to now, the MPC is expected to maintain the policy rate at 0.5% to keep ammunition for use in the worsening economic situation. amid the limited ability to implement monetary policy (policy space). The Bank of Thailand (BOT) should continue to focus on implementing targeted measures to help reduce the debt burden of businesses and households.
However, if the economic situation worsens than expected, the MPC will face pressure to issue additional aid measures in the future. The policy rate cut is still an option for the MPC. may be considered if the epidemic situation continues to be severe until the end of the 3rd quarter of
Going forward, the Thai economy is likely to face a significant increase in negative risks. The government will likely need to issue additional financial and fiscal measures to mitigate the economic impact. The BOT should continue to implement specific measures to help reduce debt burden, such as a moratorium on debt payments. at the MPC may consider reducing the policy interest rate going forward if necessary This is because the policy rate cut will help reduce the financial burden of households and businesses thoroughly.
However, amid rising global inflation and the US Federal Reserve (Fed) signaled a quicker-than-expected withdrawal of accommodative monetary policy. This may bring challenges in the Bank of Thailand’s monetary policy. by the Fed’s monetary policy that has changed in a more austere direction This will result in capital outflows from emerging markets, which the Thai economy tends to recover more slowly than other countries. As a result, the MPC It may be necessary to consider cutting interest rates in contrast to other central banks. This will be an even more stimulating factor for capital flows out of the Thai money market. and may be a factor depressing the baht in the future
