MNI REVIEW: BOK Cuts Key Rate 25bps to Historic Low 0.50%

--BOK Sees Sluggish Growth At Home And Overseas On Virus

     TOKYO (MNI) - The Bank of Korea cut its Base Rate by 25bps to a new

all-time low 0.50% Thursday in a bid to prevent the economy falling into

recession as both exports and consumer spending.

     In a statement published along side the decision, the BOK said it will

"continue to conduct monetary policy in order to support the economy and

stabilize consumer price inflation at the target level over a medium- term

horizon, while paying attention to financial stability."

     The BOK last cut rates on March 16, when it trimmed the policy rate by

50bps in the wake of an inter-meeting cut by the U.S. Federal Reserve.

     Now approaching the limits of conventional monetary policy, the BOK has

been considering additional policy tools to deal with weaker economy ahead and

has already said it will strengthen its research into non-interest rate monetary

policy instruments.

     --OUTLOOK

     According to BOK policymakers Thursday, "global economic growth and global

financial markets are likely to be affected largely by the evolution of the

pandemic, as well as by the effects of national policy responses."

     As for economic climate at home, the BOK said growth has "slowed

considerably, consumption has remained sluggish, and exports have fallen

significantly."

     On the outlook, the bank said "domestic economic growth will remain

sluggish for some time due to the impact of the Covid-19 pandemic. GDP growth is

projected to fall considerably below the February forecast of 2.1% to around

zero percent, and uncertainties around the future path of GDP growth are also

judged to be very high."

     The next policy-setting meeting is scheduled for July 16.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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