The Bank of Korea on Thursday slashed its benchmark interest rate by 100bp to 3.0%, the lowest since the bank began to set a policy rate in 1999, amid growing concerns that the economy may slip into its first recession in a decade next year. The BoK joined other central banks in reducing borrowing costs to fight a global economic slowdown. The bigger than expected rate cut comes as Asia’s fourth-largest economy slows rapidly on waning global demand for its products while inflationary pressure eases on lower oil and other raw material prices. The sharp slump last month has dampened the more optimistic forecasts of 3.2% GDP growth for the South Korean economy next year following a bumper current account surplus in October. Among the more pessimistic, UBS has predicted a 3% contraction in GDP next year.

This entry was posted by Gwen Robinson on Thursday, December 11th, 2008 at 5:30 and is filed under Capital markets. Tagged with Bank of Korea. Edit this entry.