Banking News

BOK forced to lower key interest rate following spread of MERS

BOK forced to lower key interest rate following spread of MERS

(12 June 2015 – Korea) The Bank of Korea (BOK) lowered its key interest rate to a new low on 11 June as economic recovery has been derailed by the spread of Middle East respiratory syndrome (MERS).

The central bank cut the seven-day repurchase rate to 1.5 percent, the fourth reduction since August 2014.

The MERS outbreak has killed nine South Koreans and put more than 3,000 in quarantine, threatening to damp recent improvement in consumer sentiment in an economy that’s already under pressure from a slump in exports.

President Park Geun Hye urged her cabinet to prepare all preemptive measures to minimise the impact of MERS on the economy, the Finance Ministry will closely monitor the effects of MERS on consumption and service industries.

The weakness in exports is delaying a recovery in production and investment, according to reports.

JPMorgan Chase & Co, Citigroup Inc, and ANZ Banking Group were among banks that changed their forecasts to a rate cut by July in the past couple of weeks, after having predicted the BOK would keep policy steady for the rest of the year.

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