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* Committee votes 5-2 to cut rate 25 bps to 1.50%
* Rate cut ‘buys time’ as higher risk weighed – c.bank official
* Baht has strengthened about 5.6% vs dollar this year
By Orathai Sriring and Kitiphong Thaichareon
BANGKOK, Aug 7 (Reuters) – Thailand’s central bank on Wednesday unexpectedly cut its benchmark rate, expressing worry about strength of the baht and aiming to help support faltering growth.
The Bank of Thailand (BOT), which in December hiked the benchmark for the first time since 2011, voted 5-2 to cut one-day repurchase rate by 25 basis points to 1.50% – a quarter- point above the record low.
Titanun Mallikamas, secretary of the BOT’s monetary policy committee, told a news conference a rate cut was to “buy time” as the central bank assessed heightened risks of trade wars and external factors.
The committee said it was worried about baht strength.
In a Reuters poll, 14 of 15 economists had predicted no rate change on Wednesday while the other forecast a quarter-point cut.
The Thai central bank was the third in Asia to cut rates on Wednesday.
New Zealand’s central bank stunned markets by cutting interest rates a steep 50 basis points and even flagged the risk of going nuclear by taking rates below zero.
Then the Reserve Bank of India cut interest rates for a fourth straight meeting in 2019, making a 35 basis point (bp)trim rather than the predicted 25 bps cut.
Slow economic growth, below-target inflation and the strong baht – it is Asia’s best performing currency this year – had prompted some calls to erase December’s 25 basis point rate hike, Thailand’s first increase in more than seven years.
In June, the BOT cut its 2019 economic growth forecast to 3.3% from 3.8%, and predicted no export expansion.
The MPC said on Wednesday growth was expected to be lower than forecast and below potential.
The baht eased after the decision, at was 30.81 per U.S. dollar at 0750 GMT Wednesday. It has gained about 5.6% this year, driven by capital inflows.
Kobsidthi Silpachai, head of capital markets research of Kasikornbank, said Wednesday’s split decision to cut rates “suggests that the baht’s great outperformance this year and related headaches to the economy were too great to ignore.”
“They have used their only policy bullet.”
(Additional reporting by Satawasin Staporncharnchai Editing by Richard Borsuk)