Photo : YONHAP News
The Bank of Korea(BOK) has cut its key interest rate for the first time in over three years.
After the BOK’s Monetary Policy Board held a rate-setting session Friday, the central bank announced that it has decided to lower its key lending rate by zero-point-25 percentage point to three-point-25 percent.
It marks the BOK’s first pivot in its monetary tightening policy in over three years, since it started raising rates in August 2021.
The cut comes amid a slow economic recovery and sluggish domestic demand, with the economy contracting zero-point-two percent on-quarter in the second quarter and domestic consumption decreasing zero-point-two percent in the same period.
Inflation, however, slowed to one-point-six percent in September, hitting its lowest point in over three years.
The BOK’s move comes after the U.S. Federal Reserve recently lowered its key interest rate for the first time in more than four years, cutting it by zero-point-five percentage point to the range of four-point-75 percent to five percent.
With the BOK’s rate cut, the gap between its rate and the Fed’s widened to one-point-75 percentage point.