S. Korea's central bank cuts key interest rate in over 3 yrs

[Anchor]

Amid a global trend of interest rate cuts, the Monetary Policy Board today (10.11) lowered the benchmark interest rate by 0.25 percentage points for the first time in 3 years and 2 months.

Until now, the committee had maintained high interest rates to control inflation, but with this rate cut, it has shifted its monetary policy direction towards stimulating the economy by increasing the money supply.

Reporter Kim Hye-joo has the details.

[Report]

Regarding the conditions for determining the benchmark interest rate, the Bank of Korea described the inflation situation as showing "clear stabilization."

The consumer price inflation rate in September fell to 1.6%, below the inflation stability target.

[Rhee Chang-yong/Bank of Korea Governor: "In a situation where inflation is decreasing, there is no need to unnecessarily maintain a tight stance…."]

On the other hand, the growth momentum of our economy has become uncertain as the recovery of domestic demand has been slow.

The Bank of Korea assessed that it cannot be certain whether the annual growth rate will reach 2.4%.

The need to escape from high interest rates that reduce consumer spending power has increased.

The increase in household debt, which had been a concern for the Bank of Korea until the end, also slowed down in September, leading the Bank to lower the benchmark interest rate by 0.25 percentage points.

This marks a policy shift after 3 years and 2 months since the beginning of interest rate hikes.

[Rhee Chang-yong/Bank of Korea Governor: "The government's will is very strong, and if necessary, we will strengthen (household debt management), and we can contribute to financial stability by adjusting the pace of interest rate cuts."]

The Bank of Korea has indicated that it will not rush into further interest rate cuts.

Five out of six members of the Monetary Policy Board stated that it would be appropriate to maintain the current interest rate level for the next three months, and the Bank Governor said that it is not a situation where rates can be cut by 0.5 percentage points like in the U.S.

This is KBS News, Kim Hye-joo.