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Reports: Bank of Korea may cut key interest rate

Reports: Bank of Korea may cut key interest rate

South Korea's central bank may cut its key interest rate on Monday to boost the country's sagging economy and cope with the global financial crisis, news reports said.
The Bank of Korea is expected to lower its benchmark seven-day repurchase rate to 4.75 percent from the current 5 percent at a special monetary policy meeting, the leading cable news network YTN reported Sunday.
YTN, which did not provide any source for its story, said there was a possibility the central bank would lower the rate to 4.5 percent.
The Yonhap news agency also reported that the central bank may lower its rate at the Monday meeting. But it quoted an unidentified bank official as saying various responses to the current economic difficulties would be discussed and it was still premature to predict what specific measures the bank would adopt.
Calls to the central bank went unanswered Sunday.
On Oct. 9, the Bank of Korea cut its rate by a quarter percentage point to the current 5 percent after other monetary authorities around the world slashed interest rates to fight the global financial crisis. It was South Korea's first interest rate cut since November 2004.
The Bank of Korea said Friday that South Korean economic growth slowed in the third quarter to the lowest level in three years as construction contracted and the global slowdown hit manufacturing and exports.
The bank said the gross domestic product grew 3.9 percent in the three months through September from the same period a year earlier, its worst performance since the second quarter of 2005, when Asia's fourth-largest economy expanded 3.4 percent.
The slowdown comes as the global financial crisis sends shock waves through world markets and threatens to drag major economies into recession. South Korea's stock market and currency have slumped and the government and central bank have been forced to take steps to shore up the banking system and construction sector.
Also Sunday, President Lee Myung-bak met with his top economic officials and discussed how to deal with the economic situation. Presidential spokesman Lee Dong-kwan said the president instructed officials to back a government plan to increase public spending and reduce taxes to stimulate the economy.