By Cynthia Kim and Jihoon Lee
SEOUL (Reuters) – South Korea’s central financial institution reduce benchmark rates of interest for a second straight assembly on Thursday in a shock transfer because the financial system stalled and inflation slowed greater than policymakers predicted.
The Financial institution of Korea (BOK) lowered its benchmark rate of interest by 1 / 4 share level to three.00% at its financial coverage overview, an end result solely 4 of 38 economists polled by Reuters foresaw. All others anticipated the financial institution to maintain charges unchanged.
It was the second straight reduce of 25 foundation factors since early 2009 as policymakers sought to revive the financial system now that inflation is below management.
The BOK downgraded forecasts for each development and inflation this 12 months.
It reduce 2024 development forecast to 2.2% from 2.4% beforehand. For subsequent 12 months it sees the financial system increasing 1.9%, weaker than its 2.1% outlook earlier than.
It now sees client inflation at 2.3% for this 12 months, slower than 2.5% seen beforehand.
South Korea’s policy-sensitive three-year treasury bond futures rose as a lot as 0.23 factors to 106.64 after the speed choice, whereas the received weakened.
The BOK adopted a neutral-to-dovish stance in direction of coverage in October, when it made its first rate of interest reduce in additional than 4 years as demand softened.
Governor Rhee Chang-yong holds a information convention at round 0210 GMT, which will probably be livestreamed by way of YouTube.
