The Bank of Thailand unexpectedly cut its benchmark interest rate for a second straight meeting, just hours after the Finance Ministry lowered its economic growth forecast for this year.
The central bank cut its one-day bond repurchase rate by a quarter of a%age point to 1.5%, with monetary policy committee members voting five-to-two in favour, it said Wednesday.
Only two economists surveyed by Bloomberg News predicted the decision, while 18 forecast the rate will be kept unchanged.
The Finance Ministry lowered its gross domestic product forecast to 3.7% from an earlier prediction of 3.9%. The economy expanded at its weakest pace in three years in 2014 and has struggled to recover, with exports falling for a third month in March and consumer confidence dropping to a nine-month low.
"The economic data so far show a very sluggish recovery in domestic demand and this is likely to continue throughout the first half," said Kampon Adireksombat, a Bangkok-based economist at Tisco Securities Co, who accurately predicted a cut. "We also see farm income falling further and a wage growth slowdown."
The monetary authority joined at least 30 global peers in providing stimulus this year after it unexpectedly cut borrowing costs last month. The finance ministry today also lowered the 2015 export growth forecast to 0.2% from 1.4%.
Consumer prices fell for a third month in March. The last time Thailand experienced deflation in 2009, the benchmark rate was at 1.25%.
The government's official forecaster is the National Economic and Social Development Board, which last week reiterated its February estimate for the economy to grow 3.5% to 4.5% this year if exports recover.