The following paragraph is extracted from a Monetary Policy Committee (MPC)’s press statement: In deliberating their pol
Posted: Sun Jun 05, 2022 5:00 pm
The following paragraph is extracted from a Monetary Policy
Committee (MPC)’s press statement:
In deliberating their policy decision, the Committee assessed
that the Thai economy would expand at a much lower rate in 2020
than the previous forecast and much further below its potential due
to the coronavirus outbreak, the delayed enactment of the Annual
Budget Expenditure Act, and the drought. Headline inflation was
projected to be below the lower bound of the inflation target
throughout the forecast horizon. Financial stability became more
vulnerable due to the prospect of economic slowdown. In this
situation, there was an urgent need to coordinate monetary and
fiscal measures. The Committee viewed that a more accommodative
monetary policy stance would alleviate the negative impacts.
Monetary accommodation would also support liquidity provision and
debt restructuring for businesses and households severely affected
from the economic slowdown, both of which should be urgently
implemented.
Based on this statement, what do you think would be the MPC’s
decision (whether to raise, maintain or lower the policy rate) and
why?
Committee (MPC)’s press statement:
In deliberating their policy decision, the Committee assessed
that the Thai economy would expand at a much lower rate in 2020
than the previous forecast and much further below its potential due
to the coronavirus outbreak, the delayed enactment of the Annual
Budget Expenditure Act, and the drought. Headline inflation was
projected to be below the lower bound of the inflation target
throughout the forecast horizon. Financial stability became more
vulnerable due to the prospect of economic slowdown. In this
situation, there was an urgent need to coordinate monetary and
fiscal measures. The Committee viewed that a more accommodative
monetary policy stance would alleviate the negative impacts.
Monetary accommodation would also support liquidity provision and
debt restructuring for businesses and households severely affected
from the economic slowdown, both of which should be urgently
implemented.
Based on this statement, what do you think would be the MPC’s
decision (whether to raise, maintain or lower the policy rate) and
why?