Surprise Central Bank Rate Cut in South Korea

June 9, 2016

The Bank of Korea’s Base Rate was sliced 25 basis points to 1.25%.  This first rate change in a year was made “to ensure that the recovery of economic growth continues and consumer price inflation approaches the target level over a medium-term horizon.”  Exports are still contracting, and domestic growth since April has evolved more slowly than anticipated.  Inflation fell another 0.2 percentage points to 0.8% in May.  A statement released today cites several risks to be watched: “the possibility of a British exit from the European Union, any changes in the monetary policies of major countries and capital flow movements, the progress of corporate restructuring, and the trend of increase in household debt.”

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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