Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Bank of Korea Cuts Rates to Record Low in Bid for Recovery

ForexMay 27, 2020 09:09PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
Bank of Korea Cuts Rates to Record Low in Bid for Recovery

(Bloomberg) -- The Bank of Korea cut its key interest rate to a new record low on Thursday, the latest stimulus move to shore up an economy battered by the coronavirus pandemic.

The decision to cut the seven-day repurchase rate by 25 basis points to 0.5% was predicted by 18 of 23 analysts surveyed by Bloomberg. One economist forecast a 50 basis point cut, while the rest saw no change.

The cut underscores concern within the board over risks the economy could continue slowing sharply, or even contract, despite progress in containing the outbreak at home. Exports are slumping as key overseas markets struggle to reopen from lockdowns, while job losses are surging and inflation is slowing.

“The external sector slowdown remains a severe headwind and is unlikely to be offset by domestic demand,” Krystal Tan, an economist at Australia & New Zealand Banking Group Ltd. in Singapore, said before the decision. “Broad-based weakness in economic activity along with low oil prices has intensified the risks of deflation.”

Thursday’s cut is the second since the outbreak after the BOK lowered rates by 50 basis points at an emergency meeting in March. The central bank has since taken a series of unprecedented steps to ease liquidity strains among firms and in the market.

The government has also set aside its usual fiscal prudence and is now planning a third extra budget that is likely to be bigger than the previous two.

Still, economists expect the economy to shrink this year for the first time since the Asian financial crisis in the late 1990s. The BOK is set to update its economic outlook later Thursday, having forecast 2.1% growth and 1% inflation in February.

BOK watchers will be keen to see what other measures Governor Lee Ju-yeol can deploy should the economy worsen, with conventional policy room running low. Some analysts expect the bank to announce plans to increase bond purchases as the government’s stimulus will inevitably require more debt issuance.

Thursday’s decision was the first under the BOK’s new board. With the policy preferences of its three new members still unknown to the public, any sign of dissent within the board will be watched closely for cues. One of the new members, Cho Yoon-je, didn’t take part in the vote Thurday, the BOK said.

Governor Lee typically announces whether the decision was unanimous or not in his post-decision press conference.

(Updates with more analysis)

©2020 Bloomberg L.P.

Bank of Korea Cuts Rates to Record Low in Bid for Recovery
 

Related Articles

Dollar recovers ground as risk appetite fades
Dollar recovers ground as risk appetite fades By Reuters - May 18, 2022 1

By Saqib Iqbal Ahmed NEW YORK (Reuters) -The U.S. dollar rose on Wednesday, on pace to snap a three-session losing streak, as concerns about the outlook for global economic growth...

Pound falls as UK inflation hits 40-year high
Pound falls as UK inflation hits 40-year high By Reuters - May 18, 2022 1

By Lucy Raitano LONDON (Reuters) -Britain's pound fell against the dollar on Wednesday, pulling away from almost two-week highs after data showing British inflation rising to a...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email