Thailand lowers rate by 25 basis points to 3%

By Francisco Miñana

Date: Wednesday 25 Jan 2012

The Bank of Thailand has decided to lower its benchmark interest rate by 25 basis points to 3.00% from 3.25%, matching expectations from 15 economists surveyed by Bloomberg.

It was the second consecutive rate cut by Thailand's central bank after two years of keeping the rate at 3.50%.

This monetary stimulus is aimed at easing the effects of last October's flooding that resulted in a vast amount damage to infrastructure and the agricultural sector. It was the worst flooding the country had seen in 70 years.

In the previous meeting, the Bank of Thailand lowered its 2011 gross domestic product estimate to 1.8%, compared withits prior estimate of 2.6%, and raised its 2012 estimate to 4.8% from 4.1%. The central bank is scheduled to give an updated economic forecast on February 3rd.

Thailand joins Indonesia, India, and Philippines in easing monetary policy over recent months. The European crisis could threaten growth in these emerging countries, as reported by the World Bank and the International Monetary Fund in their latest reports.

As a result of the rate cut, the Thailand Baht declined. The Dollar/Baht trades at 31.51.

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