Thailand’s central bank voted to cut interest rates four days after Governor Prasarn Trairatvorakul said no easing was needed, adding to evidence Asia’s outlook has worsened and supporting a government push to shore up growth.
For Thai Prime Minister Yingluck Shinawatra’s ruling party, keeping the farmers that form its political base happy is more important than retaining the country’s 30-year position as the world’s top rice exporter.
Thailand’s central bank kept its key interest rate unchanged for a second straight meeting, resisting pressure from the government to resume easing as it guards against the risk of inflation amid rising wage and oil costs.
Thai economic forecasters said floods that have swamped factories and displaced millions over the past month may crimp gross domestic product growth this year to as little as 0.5 percent if all of Bangkok is inundated.
Thailand’s business community is less concerned about political unrest in the country following the July 3 election, which saw the opposition Pheu Thai party win a majority in parliament, according to a poll.