South Korea is one of the United States’s major allies and one of the major economic forces in the Asia-Pacific region. However, growth has come to pass at a ‘not so remarkable’ pace in the recent past. In order to address this issue, the central bank of the southern half of the Korean Peninsula, the Bank of Korea, cut its key policy rate.
Bank of Korea Cuts Rates
This reduction in rate is the second consecutive cut introduced by the central bank in as many months.
The country has reportedly grown at a rate slower than initially anticipated. In addition the election of Donald Trump and his future, possibly isolationist and domineering policy has led to murmurs in the corridors of policymaking over the possible uncertainty that may come to pass.
In order to address the slowdown, the central bank cut the key rates to 3 per cent, after slashing it by 0.25 per cent.
The Bank of Korea, underscoring the aspect of a slowdown, also adjusted and lowered its forecast for the economy. The forecast pegged the growth at 2.2 per cent, against the previous 2.4 per cent for 2024.
Along with that it further dropped from 2.1 per cent to 1.9 per cent for 2025.
KOSPI In Decline
The Korean markets have reacted to these developments with a grave dearth of enthusiasm or hope. The Seoul-based marquee index, the KOSPI Composite Index traded in green, but only with marginal gains in the intraday trade on Thursday, November 28.
The index opened at 2,499.69 points after closing at 2,503.06 points on Wednesday.
Today’s performance |
In the intraday trade, the index increased in value, hitting the mark of 2,513.63, and also touching the low of 2,495.64 points.
At the time of writing, the index slipped from the green territory to the red zone. At 12:00 IST and local time 15:30 hrs, the index dropped by 0.013 per cent or 0.33 points.
Performance of KOSPI over the past month. |
This took the overall value of KOSPI Index to 2,502.73 points.
In the past one month of trade alone, the index has a mammoth 4.20 per cent of its value, underscoring the decline of investor confidence and low sentiment.
