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The Bank of Thailand unexpectedly cut its benchmark interest rate for the first time in more than four years to boost the economy and curb the currency’s gains as global risks surge.

The Monetary Policy Committee voted five to two to cut its key rate by a quarter-percentage point to 1.5%, the central bank said in a statement. Two of the 29 economists in a Bloomberg survey expected a 25 basis-point reduction, while the rest forecast no change.

The central bank had earlier been resistant to rate cuts, voicing concern about consumer debt levels and financial stability risks. However, the outlook for Thailand’s economy has deteriorated sharply in recent months amid escalating U.S.-China trade tensions, a worsening drought and a surging currency, which is hurting exports and tourism. The baht has gained about 8% against the dollar in the past year, the best performer in Asia.

The new government, which took office in July, also wants fiscal and monetary policy to be synchronized to protect the economy against the worsening trade tensions.

Central banks across Asia are easing policy to boost growth and keep pace with the U.S. Federal Reserve, which cut its benchmark rate by 25 basis points last week. New Zealand and India cut interest rates earlier Wednesday -- in both cases by more than forecast -- while in neighboring Philippines, the central bank is expected to lower its key rate Thursday after inflation reached a two-year low in July.

--With assistance from Tomoko Sato.

To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net

To contact the editors responsible for this story: Sunil Jagtiani at sjagtiani@bloomberg.net, Michael S. Arnold, Nasreen Seria

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