Bank of Korea cuts rate as expected to support growth South Koreas central bank cut the policy interest rate for the first time in 15 months on Thursday, a widely expected move seen as giving in to government pressure to shore up faltering domestic demand. The Bank of Koreas monetary policy committee cut its base rate by 25 basis points to 2.25 percent, a media official said without elaborating. Governor Lee Ju-yeol is due to hold a news conference from 11:20 a.m. (0220 GMT). It was the first rate cut since May last year and brought the base rate, which applies to the central banks seven-day repurchase agreements, to its lowest since early November 2010. In a Reuters survey, 27 of 31 analysts forecast a cut while the remaining four saw no change. Still, only nine of the 27 analysts predicted another reduction in the rate while 14 expected the next move to be a hike. Thursdays rate cut came after new Finance Minister Choi Kyung-hwan last month launched a series of stimulus measures to prop up faltering growth, and placed overt pressure on the central bank to ease policy. The central bank has kept the benchmark rate, which applies to its seven-day repurchase agreements, unchanged since cutting it by 25 basis points in May last year. Second quarter growth in South Korea slowed to its weakest pace in over a year as momentum in Asias fourth-largest economy cooled amid tepid exports and anemic domestic consumption. Consumer inflation has stayed below the lower end of the central banks 2.5-3.5 percent target band for two years thanks to a combination of stable global commodities prices, a strengthening won and weak consumer demand.
Posted on: Thu, 14 Aug 2014 01:18:47 +0000
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