BANGKOK – The Bankof Thailand lowered its interest rate by 0.25 percentage points, to 2.00 percent, a level last seen in Jan. 2011. It is the second time since November that the central bank has lowered borrowing costs to cushion the blow of political turmoil. "Downside risks to growth have risen in the wake of prolonged political situation," it said in a statement after its Monetary Policy Committee voted 4-3 for the cut.
Thailand's economic growth slowed sharply in the fourth quarter of 2013, to just 0.6 percent year-on-year, from 2.7 percent in the previous quarter, official figures showed last month. Prime Minister Yingluck Shinawatra has faced months of street protests aimed at ousting her elected government and installing an unelected "people's council" to oversee reforms.
Her administration has limited caretaker powers because opposition demonstrators disrupted a general election last month. Political violence and a state of emergency imposed in Bangkok and surrounding areas have dealt a blow to the kingdom's key tourism sector and raised fears of a drop in foreign investment. "Prolonged political uncertainties would continue to impede the recovery of private consumption and investment," the central bank said in its statement. "Nonetheless, exports of goods should gradually improve on the back of a recovery in major economies, providing impetus to growth this year," it added.