SEOUL, Nov 28 - South Korea's central bank, the Bank of Korea (BOK), unexpectedly reduced its benchmark interest rate by 25 basis points to 3.00% during its monetary policy review, marking the second consecutive cut. This decision comes as the economy shows signs of stalling and inflation has dropped more than anticipated.
The BOK's latest forecasts indicate a downgrading of both economic growth and inflation for this year. The growth forecast for 2024 has been revised down to 2.2% from 2.4%, with the outlook for next year also lowered to 1.9% from 2.1%. Consumer inflation is now expected to be 2.3% for this year, down from a previous estimate of 2.5%.
Following the announcement, South Korea's policy-sensitive three-year treasury bond futures saw an increase, while the won weakened. The BOK has adopted a neutral-to-dovish stance on policy since its first rate cut in over four years in October, responding to softening demand.
BOK Governor Rhee Chang-yong is scheduled to hold a news conference at approximately 0210 GMT, which will be available for livestreaming on YouTube.