The Bank of Thailand decided on Wednesday to cut the key policy rate by 0.25 percentage points from 2.50 percent to 2.25 percent, in a bid to boost the economy clouded by recent political turmoil.
The Monetary Policy Committee (MPC) of the central bank voted 6 to 1 to approve the cut, which was not in line with market expectation.
MPC secretary-general Paibul Kittisrikangwan said the MPC meeting agreed that pressure from inflation had dropped, while household debt was growing at a slower pace, so more flexible monetary policy could be used to help spur recovery from the current economic slowdown.
The ongoing political unrest, which has swept the capital city and led to shutdowns of state agencies, would damage investors' confidence in the country's economy, he said.
The policy rate had been left unchanged since October 2012.
Meanwhile, the MPC slashed its gross domestic product (GDP) growth projection for 2013 to 3 percent, from a previous forecast of 3.7 percent. Estimated GDP growth for 2014 was also lowered from 4.8 percent to 4 percent.