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BOK cuts key rate to 1.25 pct for June

All News 10:00 June 09, 2016

SEOUL, June 9 (Yonhap) -- In a surprise move, South Korea's central bank slashed its policy rate by 25 basis points Thursday, apparently anticipating a further delay in what many believe an imminent U.S. rate hike.

The Bank of Korea (BOK) slashed the key rate to a new record low of 1.25 percent for June, marking the first rate cut in 12 months.

The BOK had stood pat on the key rate after sending it to previously record low level in four rate cuts between August 2014 and June 2015.

The decision came as a surprise to many as the South Korean central bank was widely expected to again extend its wait-and-see mode amid what it has called minor signs of economic improvement in Asia's fourth-largest economy.

South Korea's exports have fallen every single month since the start of last year, but the rate of drop slowed to a five-month low of 6 percent in May.

In an earlier poll conducted by Yonhap Infomax, the financial news arm of Yonhap News Agency, 11 out of 13 economists surveyed also forecast a rate freeze in June, citing a possible U.S. rate hike this the month.

Expectations for a U.S. rate hike quickly dwindled after Janet Yellen, chairwoman of U.S. Federal Reserve System, hinted at a more gradual rise in U.S. key rate earlier this week.

bdk@yna.co.kr
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