(LEAD) BOK trims key rate to fresh record low amid deepening virus woes

(ATTN: UPDATES with reports of a BOK member being excluded from Thursday's monetary policy decision due to possible conflict of interest in last 2 paras)
By Byun Duk-kun

SEOUL, May 28 (Yonhap) -- South Korea's central bank slashed its policy rate by a quarter percentage point to a new record low of 0.5 percent Thursday to help support the country's economy tipped to grow at the slowest pace in over two decades amid the COVID-19 pandemic.

The move came a little over two months after the Bank of Korea (BOK) cut the base rate to 0.75 percent from 1.25 percent in its first emergency rate cut since October 2008.

In a recent poll conducted by Yonhap Infomax, the financial news arm of Yonhap News Agency, two-thirds, or 12, of 18 experts surveyed had anticipated the BOK to further slash the key rate this month. The BOK had stood pat in April.

Those who expected a rate cut cited the need to further insulate the economy from the COVID-19 pandemic, which has been spreading at an increasing rate globally since the BOK's emergency rate reduction, delivered on March 16.

As the virus outbreak wreaked havoc on global trade, outbound shipments by Asia's fourth-largest economy plunged 24.3 percent on-year to US$36.9 billion in April, leading to the country's first trade deficit in 99 months.

The country's exports inched down 0.2 percent on-year to $46.9 billion in March.

Partly due to such a heavy setback for South Korea's exports, which, together with imports, account for nearly half of its gross domestic product (GDP), many economic think tanks have sharply slashed their growth outlooks for the South Korean economy, with the International Monetary Fund projecting a 1.2 percent on-year contraction for Asia's fourth-largest economy.

In its latest revision, published shortly after the country reported its first confirmed case of COVID-19 on Jan. 20, the BOK slashed its growth outlook to 2.1 percent from 2.3 percent.

The BOK is set to offer its new growth estimate later in the day, and many expect its projection to be closer to zero percent than to 1 percent, which will likely mark the slowest on-year growth since 1998, when the country's economy shrank 5.5 percent on-year in the aftermath of the 1997 Asian financial crisis.

Meanwhile, the BOK said one of its monetary policy board members, Cho Yoon-je, was excluded from Thursday's vote, due to his ownership of stocks that is currently being reviewed for a possible conflict of interest.

Cho, a former ambassador to the United States, began his term at the seven-member BOK board in April, along with two other new members and a member appointed to a second term.

bdk@yna.co.kr
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