South Korea's key rate drops to record low

Published 11.06.2015 23:32

Tough times called for bold measures by South Korea's central bank yesterday, as the country's key interest rate was brought down to a record low. The Bank of Korea's (BOK) new 1.5 percent rate - down a quarter of a percentage point - is aimed at breathing life into the struggling local economy, according to policymakers. Analysts had already speculated that a cut might be on the cards at some point - but the speed at which it came was at least in part prompted by an on-going outbreak of Middle East Respiratory Syndrome (MERS). The virus had infected 122 South Koreans as of Thursday, claiming nine lives since the country's first case emerged on May 20. With fear of public places spreading faster than the disease itself, even the average layperson could see that MERS was harming businesses. The emptying of department stores and shopping districts has been amplified by a visible drop in visiting tourists - many as a result of Hong Kong and Macau advising against travel to South Korea. "We judged that it was desirable to act pre-emptively in order to ease the negative effects of MERS on economic sentiment and the real economy," BOK Governor Lee Ju-yeol explained at a briefing. A separate published report made it clear that the central bank saw the disease outbreak as a drag on recovering domestic consumption.

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