Display mode (Doesn't show in master page preview)

4 Aug 2020

Econ Digest

MPC Meeting on August 5, 2020: Policy rate likely on hold at 0.5%

         KResearch estimates that at the Monetary Policy Committee (MPC) Meeting on 5 August,  the Committee will put the policy rate on hold at 0.50% to gauge the domestic economic conditions, especially for 2Q20 GDP which is expected to be the largest contraction of the year. If the economic contraction is larger than expected, greater pressure will be mounted on the government to take more stimulus measures. The MPC is also expected to first monitor the effectiveness of the monetary and fiscal measures previously issued. In addition, it is now a period of transition for the new economic teams of the Bank of Thailand (BOT) and the Ministry of Finance (MOF), thus the MPC will not consider changing policy interest rates at this meeting, and will first observe the effects of various measures implemented earlier.               
         In this harsh economic environment where the room for monetary and fiscal policy is more limited, the government has to consider the most effective policies and the BOT should implement policies other than interest rate cuts whenever possible, especially focusing on policies that are directly effective for the business sectors and households and have the greatest effect on the economic mechanism.    
         Nevertheless, the Thai economy still faces high uncertainty, as global economic risks are heightened by the second wave of the COVID-19 epidemic in numerous countries that appears to be more severe than the first. As a result, global economic recovery has slowed down, affecting the Thai economy that is highly dependent on export and tourism sectors. Meanwhile, the first-phase compensation measures by the Thai government are coming to an end, but the still-high unemployment rate is acting as a brake on purchasing power and the domestic economy. These are pressing issues forcing the government sector to introduce additional stimulus measures in the near future. With regard to monetary policy, while it is understood that the closer an interest rate is to zero, the weaker the effect of rate cut will be, there is still the possibility of future rate cut if the necessary circumstance arises.

Scan QR Code

QR Code


This research paper is published for general public. It is made up of various sources. Trustworthy, but the company can not authenticate. reliability The information may be changed at any time without prior notice. Data users need to be careful about the use of information. The Company will not be liable to any user or person for any damages arising from such use. The information in this report does not constitute an offer. Or advice on business decisions Anyhow.

Econ Digest