Korea cuts rates as part of expansionary plan

Choinomics becomes political reality as Bank of Korea ignores its own assessment to deliver political rate cut.
Bank of Korea
Bank of Korea

Korea’s central bank dutifully delivered a 25bp interest-rate cut on Thursday as part of a “welcoming gift” for the new finance minister, Choi Hyung-hwan.

It is the first rate cut since May last year and reduces the base rate to 2.25%, delivering the easier monetary conditions that Choi says are necessary to boost growth. He has also promised W40.7 trillion of stimulus, including W11.7 trillion extra fiscal spending and a package of structural reforms a big bang expansionary policy.

Bank of Korea governor Lee Ju-yeol, who is also a new appointee, seems to have struck a cooperative relationship with Choi, drawing comparisons among analysts to...

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