The Bank of Korea joined central banks in Australia, Europe and India in cutting interest rates this month, as a weak yen dims the outlook for the nation’s exports and record household debt weighs on consumption.
Governor Kim Choong Soo and his board lowered the benchmark seven-day repurchase rate to 2.5 percent from 2.75 percent, the central bank said in a statement in Seoul today. Six of 20 economists surveyed by Bloomberg News predicted the move while the remainder forecast no change.
Today’s decision came after a four-to-three vote by the board against a cut last month, which showed the deepest division among policy makers since 2006, and as data give a mixed picture of Asia’s fourth-largest economy. Ruling New Frontier Party floor leader Lee Hahn Koo yesterday urged a “more active role” for the BOK, adding to political pressure for a cut.