HIGHLIGHTS-S.Korea cuts rates again to protect economy
Reuters - Friday, November 7
* For the full story, see [ID:nSEO51448]
* For the governor's remarks on Oct. 27, see [ID:nSEO57374]
* For analysts' remarks, see [ID:nSEO24240]
SEOUL, Nov 7 - South Korea's central bank cut interest rates on Friday for the third time in a month and kept the door open for more action, joining global efforts to shore up the world economy and soothe troubled financial markets.
The Bank of Korea trimmed its base rate <KROCRT=ECI> by 25 basis points to 4.00 percent, the lowest since June 2006, in an unprecedentedly swift follow-up to its reduction of the rate by 1 percentage point in two steps over the past month.
Following are a selection of remarks by Bank of Korea Governor Lee Seong-tae during his news conference, translated and compiled by Reuters:
"I hope the latest series of rate cuts to lead to lower market interest rates and to help prevent the economy from cooling too fast."
"Future interest rate changes will depend on how the financial markets and the economy perform."
"One of the considerations behind the aggressive policy easing is the ailing real estate market, with a sharp drop in prices and transactions."
"The overall economy has been running out of steam pretty rapidly recently, with exports slowing down fast and domestic demand staying substantially weak."
"Since our economy heavily relies on exports, the prospects for both domestic demand and exports are not bright and we will probably see considerably low economic growth next year."
"Inflation is expected to ease to below 4 percent in the middle or in the second half of next year."
"Despite the won's fall, oil prices have dropped sharply and economic activities have slowed down, taking much pressure off from inflation."
"The BOK recently increased liquidity injection and cut interest rates, but we have not seen such action giving much effect yet on corporate bonds, CDs and CPs."
"There is a time lag for the base rate cuts to influence the market rates. It seems we're having some cloggings somewhere in the financial markets now. After taking various measures, we will continue to supply cash whenever and wherever needed."
WON, CURRENT ACCOUNT
"The won has not stabilised so much as we had expected due to foreign investors' continued equity sales and increased jitters over credit risks in the domestic financial markets."
"Local banks have some trouble in rolling over their existing borrowings at maturity."
"The stability in the foreign exchange market requires an easing in foreign investors' sale of bonds and shares and local banks' capability of rolling over maturing debt, which highly hinges on the global financial market conditions."
"As other countries have slashed rates aggressively, I don't see much worrisome downward pressure on the local currency from the expanded fiscal spending and policy rate cuts."
"The current account will swing to a surplus in October and post a sizeable profit for the fourth quarter. Next year's outlook for the current account is not that bad."
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