Thailand’s central bank cut its benchmark interest rate by the most ever to support an economy ravaged by domestic political turmoil and the global recession.  The Bank of Thailand reduced its one-day bond repurchase rate by 1%  point to 2.75%, it said today in Bangkok.

Stocks rallied on optimism lower borrowing costs may spur an economy the finance minister says may not grow next year. The first rate reduction in 17 months follows six months of anti- government protests that culminated in the seizure of Bangkok’s international airport and a court ruling yesterday that forced Prime Minister Somchai Wongsawat to step down.

“Economic conditions are worsening rapidly,” Duangmanee Vongpradhip, a Bank of Thailand assistant governor, told a press briefing today. “We haven’t seen any outstanding drivers for economic growth. Government spending, which we earlier hoped would help drive economy, will be delayed.”

Thailand’s SET Index of stocks extended gains after the announcement, rising 2.6% as of 3:34 p.m. in Bangkok and paring its loss this year to 54%. The baht was little changed at 35.6 per dollar.