It is not to say that the banking sector response was all that we wanted because there were still some elements and gaps in the market response that we felt were inadequate. While overall credit grew well and continues to do so, some sectors, particularly SMEs, did not receive the credits we wanted them to get. The credit did not extend or reach out to the sectors hit particularly hard by Covid-19. Our response is to design policy measures to supplement the market response, for example, what we initially called a soft loan program. The program then started to have some obstacles because of the pricing of the loan structure. Therefore, we came up with another emergency degree on Financial Rehabilitation Measures, which in part established a loan facility for SMEs with a credit guarantee component from the government. The measures were to encourage the banks to lend to those sectors which had not received adequate credit by addressing the high credit risk that banks might experience from lending to SMEs. As a result of the package that we put together on the SME front, we managed to see loan growth in SME sectors. These measures are examples of the proactive response that policy authorities, both on the fiscal side at the Ministry of Finance and us on the monetary side at the Bank of Thailand, try to get the economy through this crisis, as well as it could be reasonably expected.
Therefore, inflation has not spread as broadly, and the likelihood of seeing second-round effects to date remains relatively low partly because of the softness of our labor market. That is the current state of the economy and the outlook, and so, what is the way forward a bit further? Page 4 of 8  Part 2: The Way Forward Immediate policy challenge is to keep the recovery intact. “No cliff” Looking a bit further, the immediate policy challenge is to ensure that the recovery is intact. We have to make sure that there are “no cliffs” or things that will interrupt our recovery path. What kinds of things would cause this? Firstly, we do not want financial conditions tightening too early because that would hurt the ongoing recovery path. In this case, we must do what is necessary to ensure that the banking sector still provides credit facilitation to the economy and help keep the recovery going. We also do not want to see an adverse impact on the Thai financial markets from the tightening in global financial markets due to the Fed or the ECB policy normalizations. However, we are well-placed to withstand the tightening, given our low external vulnerability. The other thing that would constitute a cliff is the deteriorating financial conditions. For example, a sudden and sharp uptick in non-performing loans could interrupt the banking sector and the credit intermediation channel.