The Bank of Thailand (BoT) is expected to hold its key interest rate at 0.5% today as it assesses the
The Bank of Thailand (BoT) is expected to hold its key interest rate at 0.5% today as it assesses the effects of previous policy and the likelihood of a third quarter recovery.
Three consecutive cuts earlier this year have pushed the overnight rate to its current all-time low—the monetary moves were integral in preventing more widespread economic fallout. The Thai economy continues to contract in key metrics, namely in merchandise exports and private consumption, however July month-on-month figures fell less than expected, signalling a tenuous economic stabilisation. With the overnight rate so low, some analysts believe the BoT does not want to exhaust its monetary toolbox should additional support be required.
Looking forward, Bangkok will likely forgo a rapid reopening of the economy and its borders in order to protect its successful public health measures. As such, additional fiscal stimulus will need to be allocated to hard hit industries, namely tourism. Wage protection schemes, investment in public transportation infrastructure and the promotion of domestic travel aim to reduce the shortfall wrought by a lack of foreign visitors. Expect monetary policy to remain cautiously steady in the short-term as the recovery is closely monitored.
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