Alexa

Bank of Korea begins unscheduled policy meeting

Bank of Korea begins unscheduled policy meeting

South Korea's central bank began a rare interim policy meeting Monday, a spokesman said, amid reports it was likely to cut its key interest rate to boost the country's sagging economy and cope with the global financial crisis.
Kim Seong, the spokesman, said the meeting marked the second time the bank has gathered on an unscheduled basis since its current policy mechanism was established in 1998.
The previous such meeting came after the Sept. 11, 2001 terrorist attacks in the United States when the South Korean central bank cut its key rate by half a percentage point, according to Kim.
The meeting comes as South Korean markets have suffered during the world financial turmoil. The country's benchmark stock index lost one-fifth of its value last week, its worst weekly performance on record.
The central bank 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, said there was a possibility the central bank would lower the rate to 4.5 percent.
Yonhap news agency also reported that the central bank may lower its rate at the 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.
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 3.9 percent, as construction contracted and the global slowdown hit manufacturing and exports. It was the worst performance by Asia's fourth-largest economy since the second quarter of 2005, when it 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.
On Friday, South Korea's benchmark stock index plunged 10.6 percent to 938.75, closing below 1,000 points for the first time in more than three years. The drop pushed the Korea Composite Stock Price Index to its worst weekly fall _ 20.5 percent _ since records began being kept in 1987, according to the stock exchange.
President Lee Myung-bak held an emergency meeting Sunday at which he instructed top economic officials to back a government plan to increase public spending and reduce taxes to stimulate the economy, according to his spokesman, Lee Dong-kwan. The president returned home Saturday from China, where he discussed ways to deal with the global financial meltdown with Asian and European leaders.
Senior presidential secretary Bahk Byong-won told reporters that South Korea would announce a set of comprehensive measures to revive the economy within one week.
Lee was also scheduled to give a speech Monday on the financial crisis in the National Assembly.
__
AP Business Writer Kelly Olsen contributed to this report.


Updated : 2021-04-12 01:54 GMT+08:00