MPC Meeting, March 24, 2021: Policy Rate Will Likely Be Maintained at 0.5% while 2021 Growth Outlook to be Cut Slightly (Business Brief No.3917)

​We at KResearch assess that the Monetary Policy Committee (MPC) will likely keep its policy rate steady at 0.50 percent 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 and vaccine supplies have been secured as planned. However, close attention must be paid to recovery signs of the Thai economy after new fiscal stimulus measures have been introduced such as the second phase of the “Kon La Krueng" program (co-payment), cash handout “Rao Chana" scheme (“We Win") and “Section 33 We Love Each Other" project. Prior to the implementation of these programs, the government issued a number of monetary stimulus measures, including the assistance scheme for borrowers (renewed), reduction in minimum installment payment, reduction in installment payment and revision on the regulations regarding interest rates for default cases.

The MPC's 2021 growth forecast for the Thai economy is currently at 3.2 percent, 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 percent.

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. One of those new measures that is being considered and will likely be implemented 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. It is expected that this measure will help reduce the principal and interest payment burden for ailing businesses. Moreover, participating borrowers will be given opportunities to lease the transferred assets for business purposes, which can help their employees stay employed. However, close attention must be paid to the details of this measure once they have been made clearer.