S Korea’s central bank cuts policy rate to 3% to boost economy

12 July 2012 04:39  [Source: ICIS news]

SINGAPORE (ICIS)--South Korea’s central bank has on Thursday cut its policy rates by 25 basis points to 3.0% to boost its economy amid the eurozone debt crisis, the weak US economy and slowing Chinese economy.

The Bank of Korea’s monetary policy committee cited an “intensifying” of downside risk to growth given that the global economy is recovering at a more moderate pace than originally expected, it said in a statement.

“The committee anticipates that the domestic economy will sustain a negative output gap for a considerable time going forward, due mostly to the increase in euro-area risks and the sluggish economies of its major trading partners,” the central bank said.

The central bank added that the South Korean economy has weakened more than expected, given the deterioration in external demand, with domestic demand staying at low levels.

The Bank of Korea expects the economy to post a full-year growth of 3.5%, slower than the original target of 3.7%.

The country’s economy expanded at an annual rate of 2.8% in the first quarter, with the seasonally-adjusted growth on quarter at 0.9%, according to central bank data.

By: Pearl Bantillo
+65 6780 4359

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