SEOUL: South Korea's central bank cut its policy interest rate for the second time in three months on Wednesday to spur the flagging economy, in line with the market's expectations, but many analysts see slim chances of further easing.
Following are key remarks from Bank of Korea Governor Lee Ju-yeol at a news conference.
"The decision to lower rates on Wednesday was not unanimous as one dissenter voted to hold rates steady."
"Our decision to cut rates was based on three main reasons the fact that the negative output gap is expected to close later than expected, price pressures are likely to be weaker than forecast, and the slow improvement of sentiment among financial bodies may act as a downside risk on the economy."
"We expect the rate cuts in both August and October will have a considerable boost in economic growth."
GLOBAL ECONOMY:
"The global economy is expected to sustain its modest recovery, mostly centered around the US but it faces a chance of being affected by changes in global financial market conditions sparked by a shift in the US Federal Reserve's monetary policy stance, the extended sluggishness in the euro area, and weakening of economic growth in some emerging market countries."
DOMESTIC ECONOMY:
"The negative output gap in the domestic economy will narrow gradually, but the time of its closing will be later than expected."
"South Korea is expected to post 3.5 percent growth this year and 3.9 percent growth next year."
INFLATION:
"Inflation is expected to remain low for the meantime and pick up next year but price pressure will be slightly weaker than expected."
"Annual inflation is expected to stand at 1.4 percent this year, and 2.4 percent next year.
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