Bank of Korea may cut rates to record-low

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SEOUL- South Korea’s central bank is expected to lower its policy rate to a record-low on Thursday, the third cut in the current easing cycle, a Reuters poll showed, to offset the impact on Asia’s fourth-largest economy from the fast-spreading coronavirus.

The trade-reliant economy, which was among those worst-hit by trade tensions, is faced with an extra hurdle as the virus outbreak disrupted world supply chains and global demand.

Sixteen of 26 analysts surveyed by Reuters predicted the Bank of Korea’s (BOK) seven-member board would cut the policy rate to 1.00 percent at its February meeting in a pre-emptive move.

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Another four analysts expect the central bank to cut rates at least by May.

In January, only six of 29 analysts saw a cut in February after the central bank struck a more upbeat tone at its last policy meeting due to improving trade conditions and a resilient domestic environment.

Earlier this month, BOK Governor Lee Ju-yeol said the central bank would be cautious about further policy easing, as economic indicators needed to be assessed carefully to gauge the impact from the virus.

But trade data in the first 20 days of February showed there was a slump in Chinese demand with overall sales per working day also tumbling.

“Exports per working day during the first 20 days of February fell 9.3 percent, which shows the negative spillover from the virus spread on South Korean exports have started materializing,” said Lee Mi-seon, fixed-income analyst at Hana Financial Investment. — Reuters

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