By Cynthia Kim and Jihoon Lee
SEOUL (Reuters) – South Korea’s central bank cut benchmark interest rates for a second straight meeting on Thursday in a surprise move as the economy stalled and inflation slowed more than policymakers predicted.
The Bank of Korea (BOK) lowered its benchmark interest rate by a quarter percentage point to 3.00% at its monetary policy review, an outcome only four of 38 economists polled by Reuters foresaw. All others expected the bank to keep rates unchanged.
It was the second straight cut of 25 basis points since early 2009 as policymakers sought to revive the economy now that inflation is under control.
The BOK downgraded forecasts for both growth and inflation this year.
It cut 2024 growth forecast to 2.2% from 2.4% previously. For next year it sees the economy expanding 1.9%, weaker than its 2.1% outlook before.
It now sees consumer inflation at 2.3% for this year, slower than 2.5% seen previously.
South Korea’s policy-sensitive three-year treasury bond futures rose as much as 0.23 points to 106.64 after the rate decision, while the won weakened.
The BOK adopted a neutral-to-dovish stance towards policy in October, when it made its first interest rate cut in more than four years as demand softened.
Governor Rhee Chang-yong holds a news conference at around 0210 GMT, which will be livestreamed via YouTube.
(Reporting by Cynthia Kim; Editing by Sam Holmes)
Comments