KResearch assesses that the Monetary Policy Committee (MPC) will likely keep its policy rate steady at 0.50% during the meeting scheduled for March 24, 2021 as the government has steadily implemented a series of economic stimulus measures with the aim of easing the impact of a new wave of COVID-19 on the economy. Additionally, the Thai economy is set to rebound after the resurgence of COVID-19 has subsided while two lots of COVID-19 vaccines have arrived in Thailand and additional vaccines will gradually arrive as planned. However, close attention must be paid to recovery signs of the Thai economy after new fiscal stimulus measures have been introduced.
The MPC will revise Thailand’s economic growth outlook during the upcoming meeting. Thailand’s GDP for 2021 may be revised down slightly from last projection in December 2020, thus KResearch sees no need for a policy rate cut in the near term. The MPC's 2021 growth forecast for the Thai economy is currently at 3.2%, but this figure does not take into account the impact of the resurgence of COVID-19. Therefore, it is highly likely that the MPC will revise downward its 2021 economic growth outlook during the upcoming meeting. However, due to the emergence of positive factors, including the global economic recovery and new economic stimulus measures, it is expected that the MPC will make a slight cut in its economic growth forecast for 2021. If so, this will support our projection that the MPC will maintain its policy rate at 0.5%.
Meanwhile, close monitoring must be made on new assistance measures for borrowers as the Bank of Thailand (BOT) will likely focus on more effective measures rather than general ones such as a policy rate cut. For example, the BOT may introduce specific measures to help tourism related businesses that have been hit hardest by COVID-19 and will take a long time to recover. One of those new measures that is being considered by the BOT is “Asset Warehousing", which is intended to allow borrowers to transfer assets to creditors for debt payment while they are also entitled to repurchase their assets at the agreed prices later on. However, close attention must be paid to the details of this measure once they have been made clearer.
The MPC will likely keep its policy rate steady at 0.50% during the meeting scheduled for March 24, 2021, and it is expected that the MPC will make a slight cut in its economic growth forecast for 2021 which was made in 2020.
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