The Bank of Thailand unexpectedly cut its key interest rate to boost economic growth and revive inflation, joining an easing spree by its global peers.
In a 5-2 vote, the central bank's monetary policy committee decided to cut the rate by 0.25 percentage point to 1.50%. Markets largely predicted the central bank to hold its rates.
Policymakers expect the Thai economy to expand at a slower rate than previously expected due to subdued merchandise exports amid global trade tensions.
The committee also raised concerns about the appreciation of the baht, which it said might impact the economy as trade fears grow. Average annual headline inflation is forecast to be below the lower bound of the central bank's 1% to 4% target range.
Analysts believe that the easing cycle has just begun, with at least one more rate cut lined up over the next few months.
"Further easing seems likely over the next few months," said Gareth Leather, senior Asia economist at Capital Economics, adding that at least one more rate cut is on the cards before 2019-end.
Thailand's decision comes after the Reserve Bank of India and the Reserve Bank of New Zealand delivered larger-than-expected rate cuts, as central banks around the world, including the U.S. Federal Reserve, continue to inject additional monetary stimulus amid intensifying trade tensions.
"For now, we have penciled in one more rate cut [for Thailand] in the fourth quarter of the year," said Prakash Sakpal, economist for Asia at ING. "But there may well be more to come."
The baht was down 0.25% versus the dollar as of 5:56 a.m. ET.