BANK OF KOREA SLASHES POLICY RATE

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Against market expectations, the Bank of Korea slashed its policy rate by a quarter percentage point. The central bank also projected minus growth for the Korean economy this year, the first in 11 years. The negative growth forecast is believed to have led to the rate cut.

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The Bank of Korea's monetary policy board held a rate-setting meeting and lowered the key rate by a quarter percentage point to an all-time low of 0.5 percent. The decision was unanimously approved by all board members. The BOK carried out a half a percentage point rate cut 2 months ago and market expectations were betting on a rate freeze this time. The latest trim comes as the global economy is rapidly contracting amid the coronavirus pandemic. Korean exports last month dropped 24% from a year ago, causing a deficit in the trade balance for the first time in 99 months. For these reasons, the BOK has further lowered this year's growth forecast by 2.3 percentage points to minus 0.2 percent negative growth, alongside another rate cut. A minus growth forecast by the central bank is the first in 11 years since the global financial crisis. But even this prediction is based on the premise that the pandemic will be
subdued.

[Soundbite] LEE JU-YEOL(BOK GOVERNOR) : "The growth projection is based on the assumption that global COVID-19 cases will peak during the 2nd quarter and another wave of mass infections will not occur in Korea."

With the government expected to announce a third extra budget bill, BOK Governor Lee Ju-yeol said insufficient response will bring about even greater long-term losses and pledged support to spur recovery in growth.