The Bank of Korea (equivalent to the Central Bank) Financial and Currency Committee met today to cut the benchmark interest rate by 1 yard to 1.25%. This is the Bank of Korea’s benchmark interest rate again after July this year, this interest rate level hit a two-year low.
The market generally predicts that the central bank may maintain the benchmark interest rate unchanged at the last financial currency committee meeting of the year on November 29.
South Korea’s joint news agency reported that the central bank’s interest rate cut was due to factors such as a slowdown in economic growth. The central bank lowered its forecast for economic growth this year to 2.2% from 2.6% in January. In addition, the negative growth of the consumer price index from August to September this year has raised concerns about deflation.
In addition, although the Sino-US trade negotiations reached a phased agreement, the uncertainty of the world economy still exists, and the prospects of the semiconductor market are not clear. Under this circumstance, the central bank may think that a single interest rate cut is not enough to support the economic recovery.
Some points of view point out that the current benchmark interest rate basically bottoms out, and the possibility of another interest rate cut next year will increase, and interest rate cuts may increase market liquidity and stimulate house prices.