BOK cuts key interest rate to 1.25% in October
- 5 years ago
As widely expected... Korea's central bank has lowered its key interest rate at its monetary policy board meeting today... aiming to revitalize the nation's sluggish domestic economy.
The rate is now back to the record-low level... last seen in 2017.
Kim Hyesung at the BOK for us.
The Bank of Korea on Wednesday cut its benchmark interest rate to 1-point-25 percent to support the domestic economy.
That's the same as its all-time-low rate, last seen between June 2016 and November 2017.
The decision follows a rate cut in July and a rate freeze in August.
The BOK chief said slowing global growth and the U.S.-China trade dispute are affecting domestic growth.
"Investment remains sluggish, while consumption growth is weak. Exports fell sharply on slowing global economic growth. We forecast domestic growth to fall below July's outlook on the current global economic growth trend, global trade and geopolitical risks."
The central bank had forecast local economy to grow by 2-point-two percent in 2019 back in July.
That's already down from its previous forecast of 2-point-six percent in January, 2-point-five percent in April.
Exports, which account for about half of Korea's GDP, dropped near 12 percent on-year in September, falling for the tenth consecutive month on slowing global trade and falling chip exports.
Korea's consumer price index fell point-four percent on-year in September, way below the central bank's two percent target.
"Inflation has been hovering at around zero percent recently on seasonal effects due to lower agricultural product prices this year. But it also comes from the demand side, and consumer demand is unlikely to rebound soon as economic growth is slowing down. This pressured the bank to cut rates to prevent a fall into a prolonged stage of low consumer prices."
With the benchmark interest rate lowered by 25 basis points this month, commercial banks' deposit interest rates and lending rates are expected to follow suit.
"In making its future monetary policy decisions, the Bank of Korea says it will closely analyze the effects of the latest two rate cuts on the local economy, monitor the U.S.-China trade dispute and global economic data.
Kim Hyesung, Arirang News..
The rate is now back to the record-low level... last seen in 2017.
Kim Hyesung at the BOK for us.
The Bank of Korea on Wednesday cut its benchmark interest rate to 1-point-25 percent to support the domestic economy.
That's the same as its all-time-low rate, last seen between June 2016 and November 2017.
The decision follows a rate cut in July and a rate freeze in August.
The BOK chief said slowing global growth and the U.S.-China trade dispute are affecting domestic growth.
"Investment remains sluggish, while consumption growth is weak. Exports fell sharply on slowing global economic growth. We forecast domestic growth to fall below July's outlook on the current global economic growth trend, global trade and geopolitical risks."
The central bank had forecast local economy to grow by 2-point-two percent in 2019 back in July.
That's already down from its previous forecast of 2-point-six percent in January, 2-point-five percent in April.
Exports, which account for about half of Korea's GDP, dropped near 12 percent on-year in September, falling for the tenth consecutive month on slowing global trade and falling chip exports.
Korea's consumer price index fell point-four percent on-year in September, way below the central bank's two percent target.
"Inflation has been hovering at around zero percent recently on seasonal effects due to lower agricultural product prices this year. But it also comes from the demand side, and consumer demand is unlikely to rebound soon as economic growth is slowing down. This pressured the bank to cut rates to prevent a fall into a prolonged stage of low consumer prices."
With the benchmark interest rate lowered by 25 basis points this month, commercial banks' deposit interest rates and lending rates are expected to follow suit.
"In making its future monetary policy decisions, the Bank of Korea says it will closely analyze the effects of the latest two rate cuts on the local economy, monitor the U.S.-China trade dispute and global economic data.
Kim Hyesung, Arirang News..