The Bank of Korea on Oct. 16 slashed its policy rate by a quarter percentage point to 1.25 percent amid a series of economic headwinds facing the economy, including low inflation and a steady decline in exports.
The rate reduction marks the second of its kind in three months. The reduced rate marks the lowest level, previously seen in June 2016.
The move came as the country’s exports have dipped for 10 consecutive months since December, plunging 11.7 percent on-year last month.
In September, South Korea also posted its first-ever negative growth in consumer prices, which dove 0.4 percent from the same month last year.
BOK Gov. Lee Ju-yeol has insisted the low inflation has largely been caused by a base effect created by a surge in prices of agricultural products last year.
Many, however, fear the country may be facing dangers of deflation, noting the rise in its consumer prices has remained well below the long-term target of 2 percent for years.
The rate cut is also in line with market consensus. In a survey conducted by Yonhap Infomax, the financial news arm of Yonhap News Agency, 19 out of 21 experts polled had expected the central bank to slash the policy rate.
By Ram Garikipati and newswires (firstname.lastname@example.org)