Thai Rate Cut More Than Expected on Protest, Politics

Thailand’s central bank cut its benchmark interest rate for the first time in 17 months to support an economy hurt by domestic political turmoil and the global recession. The Bank of Thailand reduced its one-day bond repurchase rate by 1 percentage point to 2.75 percent, it said today in Bangkok. None of the 21 economists surveyed by Bloomberg News expect such a large cut. Thailand joins Asian countries from Malaysia to China in lowering borrowing costs as inflation cools amid easing commodity prices and slowing global demand. A court ruling yesterday forced Prime Minister Somchai Wongsawat to step down and dissolved the ruling party, prompting protesters to end their eight-day occupation of Bangkok airports while stalling government efforts to spur the economy by increasing spending. “Fiscal policy is non-existent because of political troubles,” said Luz Lorenzo, an economist at ATR-Kim Eng Securities Inc. in Manila. “Monetary policy has to be the stimulus.”