Written by Cynthia Kim and Jihoon Lee
SEOUL (Reuters) – South Korea’s central bank unexpectedly cut interest rates for a second straight meeting on Thursday as the economy falters and inflation rises more than policymakers had forecast.
The Bank of Korea (BOK) cut its interest rate for the quarter to 3.00% in a monetary policy review, the result of just four out of 38 economists polled by Reuters. Everyone else expected the bank to keep rates unchanged.
It was the second consecutive 25-point decline since early 2009 as policymakers sought to revive the economy while keeping inflation under control.
The BOK lowered its forecasts for both growth and inflation this year.
It cut its growth forecast for 2024 to 2.2% from 2.4% previously. Next year the economy is growing at 1.9%, weak compared to 2.1%.
It now sees consumer inflation at 2.3% this year, slower than the 2.5% seen previously.
South Korea’s policy-sensitive three-year bond futures rose 0.23 points to 106.64 after the rate decision, while gains weakened.
The BOK adopted a neutral to dovish stance on policy in October, when it made its first interest rate cut in more than four years as demand weakened.
Governor Rhee Chang-yong held a news conference at around 0210 GMT, which will be broadcast live on YouTube.
