The Korea Times close
National
  • Politics
  • Foreign Affairs
  • Multicultural Community
  • Defense
  • Environment & Animals
  • Law & Crime
  • Society
  • Health & Science
Business
  • Tech
  • Bio
  • Companies
Finance
  • Companies
  • Economy
  • Markets
  • Cryptocurrency
Opinion
  • Editorial
  • Columns
  • Thoughts of the Times
  • Cartoon
  • Today in History
  • Blogs
  • Tribune Service
  • Blondie & Garfield
  • Letter to President
  • Letter to the Editor
Lifestyle
  • Travel & Food
  • Trends
  • People & Events
  • Books
  • Around Town
  • Fortune Telling
Entertainment
& Arts
  • K-pop
  • Films
  • Shows & Dramas
  • Music
  • Theater & Others
Sports
World
  • SCMP
  • Asia
Video
  • Culture
  • People
  • News
Photos
  • Photo News
  • Darkroom
  • The Korea Times
  • search
  • Site Map
  • E-paper
  • Subscribe
  • Register
  • LogIn
search close
  • The Korea Times
  • search
  • Site Map
  • E-paper
  • Subscribe
  • Register
  • LogIn
search close
Finance
  • Companies
  • Economy
  • Markets
  • Cryptocurrency
Wed, August 17, 2022 | 07:11
Economy
BOK urged to further cut rates to boost growth
Posted : 2015-03-15 15:07
Updated : 2015-03-15 22:56
Print Preview
Font Size Up
Font Size Down
By Choi Kyong-ae

Sara JohnsonSenior research director at IHS Global Insight
Sara Johnson
Senior research director at IHS Global Insight
Korea's central bank will have to cut interest rates further this year if the economy proves to be weaker than anticipated, a U.S. analyst says.

On Thursday, the Bank of Korea (BOK) lowered the benchmark interest rate by 25 basis points to an all-time low of 1.75 percent to support economic growth and prevent deflation.

The cut came unexpectedly amid growing downside risks following a cut of 50 basis points in two steps last year.

"The central bank did exactly what we expected," Boston-based IHS Global Insight senior research director Sara Johnson told The Korea Times last week.

"A 25 basis point rate reduction will not make a large difference in the economic outcome, but it will help support economic growth."

The 40-year veteran in macroeconomic forecasting and economic policy analysis said that with the won strengthening against the yen, more accommodative monetary policy might help to improve the competitive balance between the currencies.

"Inflation worldwide has diminished," she said. "Effectively this means that if the bank doesn't cut interest rates, real interest rates rise.


"A rate cut won't hurt the economy and it could help the economy. Perhaps the rate reduction should be more than 25 basis points (throughout this year)."

As for concern that lower rates could increase household debt further, Johnson said, "Home purchases will depend on employment growth, income growth, expectations of future income and wealth.

"So I don't think that should be a worry. We are not seeing signs of a credit bubble."

The researcher reiterated that it was appropriate for the BOK to instigate monetary stimulus when growth was slowing.

But she dismissed worries that Korea was heading toward Japan-style deflation.

"Korea's economy is sufficiently strong to avoid sustained deflation," she said.

"In the two years from 2016 to 2017, Korea will benefit from growing import demands from the U.S. and Western Europe."

She remained cautious about China's growth, saying several factors would restrain growth there.

These included rising debt, a weak housing market and excess capacity in some basis industries.

She said a slowdown in China's growth was one of the biggest challenges this year because China was an important export market for Korea, Japan, Australia and Southeast Asian countries.

Global Insight predicts that between 2016 and 2019, Korea's economy will grow 3.5 percent, strengthening exports, and increased spending.

Global Insight expects 6.5 percent growth for China, close to 1 percent for Japan and 8 percent for India.

In January, the BOK revised down its economic outlook for Korea this year. It projected the economy to grow by 3.4 percent, down from 3.9 percent. Its inflation projection fell to 1.9 from 2.4 percent.

The bank looks set to lower the forecasts next month given recent comments from BOK Governor Lee Ju-yeol.


"The economy is not expected to recover enough to meet our growth and inflation forecasts due to declining exports, weak spending and a lack of facility investment," he said on Thursday.

Emailcka@koreatimes.co.kr Article ListMore articles by this reporter
 
LG
  • Korean builders desperate for foreign construction workers
  • Western, traditional Korean medicine doctors clash over terminology
  • 2 Buddhist monks assault solo protester
  • Korea grapples with excess rice
  • Ruling party chief accuses president of verbal abuse
  • Instructors furious over scaling down of gugak in music teacher education
  • Gates calls on Korea to play greater role in fight against COVID-19 pandemic
  • Do Kwon says he will cooperate with investigation
  • Concerns grow over Korea's pension fund
  • HiteJinro headquarters occupied by unionized cargo truckers
  • Interactive News
  • With tough love,
  • 'Santa dogs' help rebuild burnt forests in Andong
  • 'Santa dogs' help rebuild burnt forests in Andong
  • A tale of natural wine
    • Girls' Generation music video director apologizes for copying design Girls' Generation music video director apologizes for copying design
    • Star directors' new series to A-listers' small screen comeback expected in coming weeks Star directors' new series to A-listers' small screen comeback expected in coming weeks
    • NewJeans sets record with debut album NewJeans sets record with debut album
    • 2PM's Lee Jun-ho proves versatility at 'Before Midnight' concert 2PM's Lee Jun-ho proves versatility at 'Before Midnight' concert
    • 'Confidential Assignment 2' has even more action, humor 'Confidential Assignment 2' has even more action, humor
    DARKROOM
    • Ice is melting, land is burning

      Ice is melting, land is burning

    • Tottenham 6-3 Team K League

      Tottenham 6-3 Team K League

    • Afghanistan earthquake killed more than 1,000

      Afghanistan earthquake killed more than 1,000

    • Divided America reacts to overturn of Roe vs. Wade

      Divided America reacts to overturn of Roe vs. Wade

    • Namaste: Yogis to celebrate International Yoga Day

      Namaste: Yogis to celebrate International Yoga Day

    The Korea Times
    CEO & Publisher : Oh Young-jin
    Digital News Email : webmaster@koreatimes.co.kr
    Tel : 02-724-2114
    Online newspaper registration No : 서울,아52844
    Date of registration : 2020.02.05
    Masthead : The Korea Times
    Copyright © koreatimes.co.kr. All rights reserved.
    • About Us
    • Introduction
    • History
    • Location
    • Media Kit
    • Contact Us
    • Products & Service
    • Subscribe
    • E-paper
    • Mobile Service
    • RSS Service
    • Content Sales
    • Policy
    • Privacy Statement
    • Terms of Service
    • 고충처리인
    • Youth Protection Policy
    • Code of Ethics
    • Copyright Policy
    • Family Site
    • Hankook Ilbo
    • Dongwha Group