Higher risk from the prospect of a liquidity drop is expected to cause volatility in the capital and money markets as an increase in US inflation and bond yields has signalled the country may be planning to taper its quantitative easing (QE), says Sukit Udomsirikul, managing director of research at SCB Securities (SCBS).

Mr Sukit says the third wave in Thailand may drive analysts to revise their 2021 economic growth forecasts.

The outlook for the Thai economy and the stock market remains dim for the second and third quarters, with the reemergence of the virus hampering recovery in most sectors.

The implementation of QE increased liquidity in the market, causing asset prices to rise over the past year, even during the Covid-19 crisis.

However, as the economy shows signs of recovery, namely increases in the inflation rate and bond yields, the US government may decide to taper QE, causing prices to drop based on…

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