Thailand cuts interest rates as economy stutters
Bangkok (AFP) - Thailand's central bank cut its benchmark interest rate Wednesday in a surprise move to boost the kingdom's economy, which is still struggling despite junta promises to revive its fortunes since taking power last year.
The Bank of Thailand said in a statement its policy board members voted by 4-3 to cut the rate to 1.75 percent from 2.0 percent. Most analysts had been expecting it to hold rates.
The reduction is the first since last March as the recovery in the economy since the junta's May coup has been slower than hoped.
It is also the latest by regional central banks -- including China and India -- as they try to prop up their economies in the face of a global slowdown.
"The committee judged that the outlook of the Thai economic recovery is weaker than previously assessed," the bank warned.
"Fiscal stimulus will take time to materialise, while headline inflation is projected to remain low for a certain period of time," it added.
The Thai baht slipped to 32.86 against the dollar after the announcement, its lowest since mid-January.
Thailand's economic growth slowed sharply in 2014 to its weakest pace in three years, as political turmoil compounded a fall in agricultural prices and waning exports.
Gross domestic product (GDP) expanded 0.7 percent last year, well down from the 2.9 percent recorded in 2013.
Thailand's military takeover brought to an end months of disruptive street protests against Yingluck Shinawatra's democratically elected administration.
While the coup ended the protests -- part of a cycle of 10 years of political instability dogging the kingdom -- the military's pledge to drive an economic revival has yet to materialise.
The junta has vowed to pump billions of dollars into the economy, mainly through long-planned infrastructure schemes.
But analysts say the cash has yet to appear, while continued political uncertainty, weak global demand and low prices for key Thai exports such as rubber and rice have dimmed hopes for the spending blitz.
Last month junta chief Prayut Chan-O-Cha said he expects the country's economy to grow between three and four percent this year.
