Thailand’s central bank unexpectedly cut its benchmark interest rate for the first time since January as a faltering global economy damps exports, days after the governor said there was no need to ease policy.

The Bank of Thailand cut its one-day bond repurchase rate by a quarter of a percentage point to 2.75 percent, it said in Bangkok today. The decision was predicted by three of 23 economists in a Bloomberg News survey, while the rest expected no change. The monetary policy committee voted 5-2 in favor of a cut, it said in a statement, without disclosing names.

Thailand’s move today contrasts with Governor Prasarn Trairatvorakul’s stance in an Oct. 13 interview that there was no need for a rate cut, even after Finance Minister Kittiratt Na-Ranong called for lower borrowing costs and a weaker baht to help exporters. The central bank said today there was no political interference in the decision, as it joined South Korea and Brazil in reducing borrowing costs to shield growth.

“The priority of the monetary policy committee has shifted towards growth rather than inflation,” said Kobsidthi Silpachai, head of capital markets research at Kasikornbank Pcl. “The committee has probably taken some guidance and some concerns expressed by the government,” and the International Monetary Fund’s downgrade last week of its global expansion forecast might have helped tip the balance in today’s decision, he said.

The Thai baht trimmed gains to climb 0.1 percent to 30.64 per dollar as of 4:07 p.m. in Bangkok. The benchmark SET index of stocks extended gains, climbing 0.9 percent, while the yield on the 3.25 percent notes due June 2017 dropped 16 basis points, or 0.16 percentage point, the most since August 2011.

Negative Impact

“The overall global economic outlook remained weak,” and “the substantial degree of uncertainty surrounding the outlook could hamper exports,” the Bank of Thailand said in a statement today. With inflation contained, “monetary policy easing was warranted to shore up domestic demand in the period ahead and ward off potential negative impact from the global economy.”

The monetary authority today maintained its forecast for growth in 2012 at 5.7 percent, and said it would announce a revision of its prediction for 2013 from 5 percent next week.

The IMF last week cut its 2012 growth forecast for developing Asia to 6.7 percent from a July prediction of 7.1 percent and said policy makers in the region have scope to ease monetary policy and bolster expansion should the outlook deteriorate. Still, Prasarn said in the interview there is no need to cut borrowing costs as credit growth is accelerating and domestic demand is countering a slowdown in exports.

Total bank loans climbed 14.2 percent in the second quarter from a year earlier, from 13.9 percent in the previous three months as local demand rebounded after last year’s floods.

‘Not Easy’

Making rate decisions is “not easy” and the move today wasn’t a result of political interference, Assistant Governor Paiboon Kittisrikangwan said in a briefing today. “It’s not clearly black and white,” he said.

Only five members of the seven-member monetary policy committee attended last month’s meeting when the central bank held rates, with three voting to hold and two recommending a cut.

Southeast Asia’s second-biggest economy expanded 4.2 percent in the second quarter from a year earlier, after growing a revised 0.4 percent in the previous three months. Inflation accelerated to a six-month high of 3.38 percent in September.

Exports slid 6.95 percent in August from a year earlier, falling for a third consecutive month as demand for Thai products from electronics to rubber weakened.

“Growth risks may be elevated next year because of high uncertainties in the global economy,” Paiboon said. “The rate cut this time is to boost confidence that monetary policy is ready to support the economy,” he said, adding that today’s decision is not a signal of a downward trend.

Bloomberg