The Bank of Thailand cut the policy rate yesterday by 0.25 percent from 0.75 to 0.5 per cent effective immediately, Titanun Mallikamas, secretary of the MPC, said after the committee’s meeting on Wednesday (May 20).

 In deliberating their policy decision, the Committee assessed that the Thai economy would contract in 2020 more than the previous assessment due to the more-than-expected contraction of the global economy along with the containment measures worldwide. Headline inflation would be more negative than previously assessed. 

The Thai economy would contract more than the previous assessment

Tourism and merchandise exports were affected by trading partners’ economies more than expected. Meanwhile, domestic demand, both private consumption and private investment, would contract more than previously assessed due to higher unemployment and the containment measures. Nevertheless, financial and fiscal measures would help partly to alleviate liquidity problems of households and businesses as well as support the Thai economy to recover gradually. 

According to the Bank of Thailand’s latest data release, Thailand’s GDP could contract by 5.3 per cent in 2020, a sharp lowering from its 2.8 per cent previous projections in December.

The financial institution system remained sound

Commercial banks had robust capital fund and loan loss provision levels. Nevertheless, there remains a need to monitor the risks that may pose vulnerabilities to the stability of the commercial banking system in the period ahead, particularly defaults by businesses and households after the phase-out of liquidity support measures. 

About the author

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Sign Up for Our Newsletter

Get notified of our weekly selection of news

You May Also Like

Fitch keeps Thailand’s credit rating at BBB+ with a stable outlook

Fitch Ratings has retained Thailand’s credit rating at BBB+ with a stable outlook, saying external finance and strong macroeconomic policies are Thailand’s key strengths.

How will US interest rates affect emerging markets?

While the rate hikes were initiated to help the US domestic economy, higher interest rates are nevertheless likely to impact emerging markets.

Bank of Thailand keeps policy rate unchanged at 0.5%

The Bank of Thailand kept its key policy rate unchanged at 0.5%, amid growing pressure coming from rising prices and monetary policy tightening by its peers.