The Bank of Thailand cut its benchmark interest rate by 0.25 percentage points to 2%, its lowest level in three years.
The move comes amid continuing political turmoil in the country.
It is the second rate cut since November, as the bank tries to encourage spending after a slowdown in economic growth.
"Downside risks to growth have risen" in the wake of the prolonged political situation, the central bank said in a statement.
Thailand's economic growth has slowed recently, to just 0.6% in the last quarter of 2013 from 2.7% in the previous quarter.
The bank noted that tourism had been particularly hard hit.
However, it added that it was optimistic about growth in the region helping Thailand's economy.
"Prolonged political uncertainties would continue to impede the recovery of private consumption and investment. Nonetheless, exports of goods should gradually improve on the back of a recovery in major economies," the bank wrote.
Prime Minister Yingluck Shinawatra has faced months of protests aimed at ousting her elected government and installing an unelected "people's council" to oversee reforms.
Recommended Content
Editors’ Picks
EUR/USD stays weak near 1.0700 ahead of key EU inflation, GDP data
EUR/USD is keeping the red near 1.0700, undermined by a broad US Dollar rebound and a mixed market mood early Tuesday. Germany's Retail Sales rebound fail to impress the Euro ahead of key Eurozone inflation and GDP data releases.
GBP/USD remains pressured toward 1.2500 on US Dollar rebound
GBP/USD is extending losses toward 1.2500 in European trading on Tuesday. A cautious risk tone and a decent US Dollar comeback weigh negatively on the pair. The focus now shifts to mid-tier US data amid a data-light UK docket.
Gold struggle with $2,330 extends, as focus shifts to Fed decision
Gold price is looking to build on to the previous downside early Tuesday, as traders continue to take profits off the table in the lead-up to the US Federal Reserve (Fed) interest rate decision due on Wednesday.
BNB price risks a 10% drop as Binance founder and ex-CEO Changpeng Zhao eyes Tuesday sentencing
Binance Coin price is dumping, with the one-day chart showing a defined downtrend. While the broader market continues to bleed, things could get worse for BNB price ahead of Binance executive Changpeng Zhao sentencing on Tuesday, April 30.
Data fuels China optimism
China's factory activity has expanded for a second consecutive month, marking the best streak in over a year and fueling optimism for the sustainability of the world's second-largest economy's recovery.