Home Central Banks Trade War Looms Large Over BoK Cut

Trade War Looms Large Over BoK Cut

Stockholm (Ekonamik) – The Bank of Korea (BoFK) decided to cut its policy interest rate by 25 basis points (bps) on Wednesday, October 16th. This is the second time this year that the BoK cuts its policy rate after a surprise 25bps slash in July.

“The Board judges that the pace of domestic economic growth has remained slow, as consumption growth has weakened, while the adjustment in construction investment and the sluggishness in exports and facilities investment have continued,” the decision’s accompanying press release noted. “Going forward the Board expects domestic economic growth to fall below the July projection, owing chiefly to the continued US-China trade dispute and the heightened geopolitical risks.”

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In July, the BoK projected GDP growth of 2.2% for 2019 and 2.5% in 2020. Inflation was expected to reach 0.7% and 1.3% for the same year. These expectations are still slightly optimistic compared to the IMF’s October World Economic Outlook Report, which forecasts real GDP growth for the two years at 2% and 2.2%, respectively.

The BoK will meet again on Friday, November 26. This will be the last meeting of the year.

Image by Kibeom Kim from Pixabay

 

Filipe Wallin Albuquerque
Filipe Wallin Albuquerque
Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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