March 17, 2020 09:24
The Bank of Korea in an extraordinary meeting Monday slashed the base interest rate from 1.25 to 0.75 percent. The surprise move follows the Fed's rate cut to nearly zero a day earlier and is a record low for Korea, whose benchmark interest rate had never dipped below one percent.
It was also the most drastic cut since the 2008 global financial crisis, demonstrating the grave impact of the coronavirus epidemic on Korea's economy.
"The spread and intensity of the COVID-19 outbreak is faster and stronger than expected, so the impact on the economy is also bigger than expected," BOK Governor Lee Ju-yeol told reporters.
He hinted at further cuts by adding, "We expect it to be prolonged but are ready to use all our resources to respond adequately."
The move could boost liquidity for cash-strapped businesses impacted by the epidemic but was not enough to allay financial market jitters, with the Korea Composite Stock Price Index plummeting another 3.19 percent to close at around 1,714.86.
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