The Bank of Korea slashed its policy rate on Thursday by a quarter percentage point to a new record low of 0.5 percent amid a considerable slowdown in South Korea's economic growth due to the COVID-19 pandemic.
The move came a little over two months after the central bank cut the base rate to 0.75 percent from 1.25 percent in its first emergency rate cut since October 2008.
In a statement, the BOK pointed to the pandemic saying it may continue to hurt the economy down the road.
The bank forecast gross domestic product to fall below the February forecast of 2.1 percent to around 0 percent as uncertainties around the future path of GDP growth remain very high.
It also projected the local economy to contract 0.2 percent this year due, a sharp cut from the 2.1 percent on-year expansion previously forecast, due to a plunge in exports.
In April, outbound shipments declined 24.3 percent, leading to the country's first trade deficit in 99 months.
BOK chief Lee Ju-yeol said although the latest rate reduction may have brought the policy rate closer to the so-called lower boundary, it will continue to shift on the policy of other major economies, as well as conditions in the financial market.
Lee explained the bank is fully prepared to take any additional necessary steps, adding all options are on the table, including non-monetary policy measures.
<Photo: Yonhap News>
