A pedestrian walks past signage for the Bank of Korea in Seoul, South Korea, on Monday, Nov. 22, 2021.
SeongJoon Cho | Bloomberg | Getty Images
South Korea on Thursday cut its benchmark interest rate by 25 basis points to 3% in a surprise move, as the country strives to boost its economy that has seen tepid growth.
Economists polled by Reuters had estimated the bank to hold rates at 3.25%.
This also marked the first time the BOK has enacted two back-to-back cuts since 2009. It had cuts rates by 25 bps cut in its last meeting in October.
The Kospi stock index was up 0.18%, while the South Korean fell 0.37% to trade at 1,393.82 against the U.S. dollar.
The rate cut follows a weaker-than-expected GDP reading in the third quarter. South Korea’s third-quarter GDP expanded by 1.5% year on year, below the 2% expected by economists polled by Reuters.
BOK lowered its GDP forecast to 2.2% for 2024, down from 2.4% forecast in August, Reuters reported. The full-year growth outlook for 2025 was cut to 1.9% from 2.1%.
Inflation in the country has also slowed substantially, with the October reading at 1.3%, its lowest rate since February 2021.
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