The Committee voted unanimously to maintain the policy rate at 0.50 percent to support the economic recovery which remained highly uncertain.

The Committee assessed that, while the new wave of the COVID-19 outbreak and the containment measures would affect the Thai economy in the short term, the economic recovery continued to be on track thanks to government measures and export recovery.

Uncertainties surrounding the economic outlook remained high

Nevertheless, uncertainties surrounding the economic outlook remained high with considerable downside risks. The economy would thus need support from the continued low policy rate.

The Committee therefore voted to maintain the policy rate at this meeting to preserve the limited policy space to act at the appropriate and most effective timing.

Impact of the recent outbreak on the Thai economy

The Committee assessed that the impact of the recent outbreak on the Thai economy would be less severe than last year due to less strict containment measures.

Additional support from the timely and targeted government measures together with the export recovery would support economic growth. The Committee thus expected the economy to expand somewhat lower than the previous forecast.

The recovery prospect remained highly uncertain

Nonetheless, the recovery prospect remained highly uncertain, which would in the short term depend mainly on the situation of the new wave of the COVID-19 outbreak and corresponding containment measures.

At a longer horizon, it would depend on

  • (1) the recovery in foreign tourist figures,
  • (2) efficacy and coverage of COVID-19 vaccination,
  • (3) continued and sufficient fiscal support, and
  • (4) the labor market situation, which became more fragile as the numbers of unemployed and underemployed workers were expected to rise in the short term.

Furthermore, recoveries across economic sectors were likely to be more uneven which would affect the sustainability of the economic growth going forward.

The financial system remained sound despite increasing vulnerabilities in some segments due to the negative shocks from the recent outbreak.

In particular, low-income households and SMEs became more vulnerable. Headline inflation was projected to return to the target in the middle of 2021 and would stay close to the lower bound of the target range throughout the forecast period. Medium-term inflation expectations remained anchored within the target.

Download the full statement here

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