South Korea Cuts Rates For Third Time In a Month

South Korea's central bank cut its benchmark interest rate on Friday by a quarter point, as expected, its third cut in a month to try to calm markets and boost the economy in the face of the global financial crisis.

Korea, Korean Flag
Korea, Korean Flag

The Bank of Korea reduced its base rate to 4.00 percent, the lowest level since early June 2006, following cuts totalling 1 percentage point in October alone as it joined a global round of interest rate cuts as the world squares up to its worst financial crisis in decades.

The decision comes after the European Central Bank and the Bank of England both cut rates on Thursday and following a wave of cuts from other central banks in the past week or so, including those in the United States, China and Japna.

A press official at the Bank of Korea informed reporters of the decision by its monetary policy committee, without elaborating.

Governor Lee Seong-tae is due to hold a news conference shortly.

Nine of 14 analysts in a Reuters poll had predicted a 25-basis-point cut, four had forecast a 50 basis-point cut and one had expected no change.

The government proposed an $11 billion economic stimulus package earlier this week, its latest move to shore up an economy that is losing steam rapidly.