South Korea cuts policy interest rate, Latest Business News - The New Paper

South Korea cuts policy interest rate

This article is more than 12 months old

SEOUL : South Korea's central bank cut its policy interest rate yesterday, as expected, and left the door open for further easing although a split vote on the move suggested the next reduction may not be imminent.

The Bank of Korea's monetary policy board trimmed the base rate by 25 basis points to 1.25 per cent in a 5-2 vote, an indication the call for looser settings was not as broad as some analysts had expected. Government bond prices fell across the board as investors tempered their rate cut views, with yields rising by around 5 basis points.

"There is still room for us to respond to changing financial and economic conditions," Governor Lee Ju-yeol said, adding that global uncertainties remained high despite some signs of hope in the world economy.

He said Asia's fourth-largest economy would likely miss the central bank's latest growth forecast of 2.2 per cent this year and that the central bank would release new projections when it updates its forecasts next month.

The rate cut follows a July easing and was in line with forecasts in a Reuters survey of 31 analysts. The new rate matches a record low set in late 2017.

South Korea's economic growth has tumbled in recent quarters, hit by cooling global demand and the prolonged US-China tariff war, due to its heavy reliance on the export of chips, cars and ships.

The central bank next reviews policy on Nov 29. - REUTERS