Economic Concerns Grew Ahead of Bank of Korea Cut, Minutes Show
(Bloomberg) -- Concerns about economic momentum have grown among board members at the Bank of Korea, according to minutes of their Oct. 11 meeting where the majority decided to cut the benchmark interest rate by 25 basis points to commence a policy pivot.
Most Read from Bloomberg
There Will Soon Be No Meatpackers Left in NYC’s Historic Meatpacking District
NY Transit Agency Takes Next Step on Brooklyn-Queens Rail Link
A Courtyard Apartment Building Designed for Southwest Sprawl
At least five of the seven members displayed some level of concern about slowing economic growth, weaker-than-expected consumption or challenges facing smaller businesses, according to the minutes released Tuesday by the BOK. The US presidential election, conflict in the Middle East and the sluggish Chinese economy were other factors raising economic uncertainties, according to some members.
The decision to reduce the rate to 3.25% was opposed by one member, who Governor Rhee Chang-yong identified as Chang Yongsung in a post-decision meeting. The minutes showed the member saying the BOK should wait for clearer signs that home prices and household debt were cooling as a rate cut could reignite the property market.
Most of the members who voted for the cut shared concerns about real estate prices, but thought there were enough signs of a slowdown to allow the BOK to ease the restrictiveness of the policy rate now. A 50-basis-point rate cut by the Federal Reserve in September, which eased pressure on the won, also helped pave the way for the BOK to go ahead with a pivot, one member said.
The BOK next meets for a rate decision in late November, with most economists expecting a hold. Speculation for a faster-than-expected easing cycle has grown, however, since the BOK reported last week that the economy barely grew last quarter from the previous three months.
The BOK forecast of 2.4% economic growth in 2024 is very likely to be revised down when the board reconvenes next month, Rhee told lawmakers earlier Tuesday. He speculated it could be either 2.2% or 2.3%, and added predictions for 2025 have turned much more difficult due to growing geopolitical risks and weakening export volumes.
Most Read from Bloomberg Businessweek
Dog Man Movie Is Here to Swoop In and Rescue the Children’s Book Business
The Influencer Bros Selling More Baseball Bats Than the Pros
©2024 Bloomberg L.P.