(Bloomberg) -- The Bank of Korea said Wednesday it will seek to monitor and stabilize markets, stopping short of following the Federal Reserve in easing policy to respond to the coronavirus epidemic.
The BOK said it would consider changes in the policy environment, including the Fed’s 0.5% rate cut and a joint statement from Group of Seven finance chiefs Tuesday pledging to shield their economies from the spreading virus.
“These changes need to be considered appropriately as monetary policy is managed going forward,” BOK Governor Lee Ju-yeol said in a statement. Lee added that he sees a limit to what monetary policy can do to counter the virus’ impact and that the bank’s actions should harmonize with the government’s.
The statement took hours to draft and came in about 50 minutes behind schedule, potentially suggesting that some senior officials at the bank may have wanted to take more action and that reaching agreement on language was challenging.
While the BOK didn’t follow the Fed with a surprise rate cut, it didn’t close the door to further action either.
“The governor’s message didn’t include what the markets expected -- an emergency board meeting or something like that,” Theo Huh, an analyst at Samsung Futures Inc., said. He said investors now see an April rate cut rate from the BOK as a near certainty.
The BOK last week kept its key rate on hold, while cutting its growth forecasts for this year to 2.1% from 2.3%. South Korea has the largest number of confirmed cases outside China, and President Moon Jae-in has called for “extraordinary steps” to protect the economy from the outbreak.
Earlier Wednesday South Korea’s government said it is seeking a 11.7 trillion won ($9.8 billion) extra budget to help businesses hit by the world’s second-largest coronavirus outbreak, joining policy makers around the globe intensifying responses to the epidemic.
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