Bank of Korea (BOK), South Korea's central bank, cut its benchmark interest rate by 25 basis points ( bps) to 2.75 percent on Thursday, altering the policy rate once again in three months, to boost the Asia's No.4 economy amid worsening economic outlook.
Governor Kim Choong-soo and the monetary policy board members decided to lower the 7-day repo rate by 25 bps to 2.75 percent at the October rate-setting meeting. The BOK had frozen the rate at 3. 25 percent since July 2011, but it resumed its monetary easing in July by unexpectedly lowering the borrowing costs by 25 bps. " Today's rate cut stemmed mostly from the worsening economic outlook. We cut our 2012 growth outlook for the country by 0.6 percentage point to 2.4 percent," Kim told reporters after the October rate-setting meeting.
Kim said that external economic conditions were aggravated further, noting that the South Korean economy was slumping due mainly to the worsening external situation. The governor stressed that it would be more important to preemptively respond to the worsening conditions than to leave room for future policy action.
The October policy decision was roughly in line with market consensus as most experts predicted the rate cut, citing worsening economic outlook, monetary easing by major central banks and still weak economic activity at home.