South Korea’s central bank cut its key interest rate yesterday to a record low 2 percent to boost the country’s fast-fading economy.
The Bank of Korea lowered the benchmark seven-day repurchase rate half a point from 2.5 percent at a regular policy meeting.
South Korea’s export-driven economy has been hit by declines in global consumer demand. Exports plunged a record 32.8 percent last month.
“The pace of the domestic economic slowdown has accelerated,” the bank’s monetary policy committee said in a statement, pointing to drops in consumption, investment and exports.
“There is considered to be a greatly deepened downside risk to economic growth, which has been heightened by the worsening worldwide slump and the likelihood of the credit crunch persisting,” the committee said.
Yesterday’s cut marked the sixth time the central bank has slashed the benchmark rate since Oct. 9. A full percentage point reduction in December was its biggest cut ever.
The Bank of Korea, along with other monetary authorities, has aggressively cut rates in response to the global slump. South Korea is also suffering from declining consumer spending and fears about weakness in local banks.