BOK cuts rate to 3.25% for first time in 4 years

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BOK cuts rate to 3.25% for first time in 4 years

Published: 11 Oct. 2024, 09:54 Updated: 11 Oct. 2024, 17:51

PARK EUN-JEE
park.eunjee@joongang.co.kr

Bank of Korea Gov. Rhee Chang-yong bangs the gavel at the central bank in central Seoul on Friday. [YONHAP]

The Bank of Korea slashed its benchmark interest rate by 25 basis points to 3.25 percent on Friday, delivering its first rate cut since May 2020.

The Korean central bank attributed its decision to a combination of weak domestic demand and economic growth outweighing concerns surrounding financial stability and inflation.

Korea’s inflation fell below the 2 percent mark for the first time in more than three years in September primarily due to lower fuel prices. Still, the country's real GDP contracted 0.2 percent on quarter during the second quarter, prompting major institutions, including the Organisation for Economic Cooperation and Development, to revise down their projections for this year’s economic growth.

The move follows the U.S. Federal Reserve’s footsteps, as the bank lowered interest rates by half a percentage point to a range between 4.75 percent and 5 percent last month.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]