The Bank of Korea cut its benchmark interest rate by 25 basis points to 3.25% on Friday, delivering the central bank's first reduction since May 2020 after nearly two years of holding borrowing costs steady at 3.50%.
INFLATION STABILISES, GROWTH SLOWS
The Bank of Korea cited a stabilisation of inflation and slowing economic growth.
Exports had held up, but the recovery in private consumption had been delayed, and the Bank of Korea said high interest rates on household loans were limiting consumers' spending capacity.
The Bank of Korea did not commit to a pace of further easing.
FIRST CUT IN OVER FOUR YEARS
The last time the Bank of Korea reduced its policy rate was in May 2020, following an emergency cut in March 2020, when cuts were deployed to cushion the economic blow from the onset of the COVID-19 pandemic. The central bank then raised rates from August 2021 to January 2023 before holding at 3.50%.