BOK cuts rates to 0.50%, sees biggest GDP contraction since Asian financial crisis, KRW off lows

As widely expected, the Bank of Korea (BOK) cut the key interest rate by 0.25bps to the lowest since the South Korean central bank adopts the current policy system at 0.50%.

The decision comes, as the BOK board predicts the economy to contract this year, in the face of the coronavirus pandemic led economic shock. The central bank has already announced unlimited bond-buying in its previous meeting to stimulate the economy.

Key details

“The bank downgraded its 2020 economic projection to a 0.2% decline, from its February forecast for 2.1% growth.

“The contraction would be the biggest since the 1998 Asian financial crisis. “

“The BOK also sees inflation for this year at 0.3%, down from 1.0% seen earlier.”

On the fiscal front, the government is considering announcing for a third supplementary budget as April exports suffered the worst slump in 11 years.

more to come ...