Bank of Korea to Hold Emergency Board Meeting, Rate Cut Eyed
The unscheduled meeting at 4:30 p.m. local time on Monday has been called for by Governor Lee Ju-yeol.
(Bloomberg) -- The Bank of Korea will hold an emergency board meeting for a potential rate cut as the coronavirus morphs into a global pandemic threatening the South Korean economy.
The unscheduled meeting at 4:30 p.m. local time on Monday has been called for by Governor Lee Ju-yeol, the bank said by a text message. Board members have discussed the need for a special session since last week.
The BOK has faced criticism from some central bank watchers for holding fire at the February meeting, even as the economy was already reeling from spiking coronavirus cases. The BOK’s announcement on an emergency board meeting -- as seen during the global financial crisis and in the wake of the 9/11 terrorist attacks -- underscores a sense of urgency among the board that they have to act before it gets too late.
Now the focus would be to what extent the BOK would lower rates. The Federal Reserve and others have taken aggressive actions, with some slashing rates to levels they see as the floor before wading into unconventional policy. The BOK has previously said its lower bound on rates needs to be higher than key-currency economies, without specifying a level.
The BOK revised down its growth projections for the South Korean economy to 2.1% in February, but that already looks out of reach as the virus outbreak paralyzes businesses across huge swathes of the global economy. The BOK increased cheap loans to small businesses at the February meeting, saying that was a more effective way to handle economic difficulties from the virus.
Meanwhile the government has sought to step up fiscal spending with an 11.7 trillion won ($9.5 billion) extra budget, with talks among politicians that the amount needs to be expanded. South Korea has among the world’s highest infection cases at over 8,000, although the pace has started to slow.
To contact the reporter on this story: Sam Kim in Seoul at skim609@bloomberg.net
To contact the editors responsible for this story: Paul Jackson at pjackson53@bloomberg.net, Jiyeun Lee, Peter Pae
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