Regarding the Monetary Policy Committee (MPC) Meeting on June 24, 2020, KResearch has assessed that the committee will consider putting the policy rate on hold at 0.50 percent as it waits to gauge the effectiveness of the monetary and fiscal measures that were previously issued. These measures includes a downward adjustment of the policy rate in May, financial assistance measures such as debt moratoriums, soft loans and debt restructuring, as well as relief measures and stimulus packages that were launched to alleviate the impact of COVID-19 and support both businesses and households through this ongoing crisis.
Nevertheless, the Thai economy is still vulnerable to global economic malaises and weakened purchasing power at home. The Baht's appreciation is also putting further pressure on the economy. Hence, the MPC is expected to continually monitor the situation, weigh the risks involved and assess the sufficiency of the fiscal and monetary measures that are currently in effect, in order to best ascertain future monetary policy.
In light of the aforementioned risks, the Bank of Thailand (BOT) is likely prepared to adopt appropriate tools in navigating the crisis, should the need arise. The BOT may implement unconventional monetary measures like a liquidity enhancement scheme. While leeway exists for further reduction of the policy rate, the current situation does not yet warrant such action.
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