All BOK policymakers vote for Feb. rate cut: minutes

SEOUL, March 31 (Yonhap) -- Policymakers at the Bank of Korea (BOK) voted
unanimously to cut its key interest rate by half a percentage point in a bid to
prop up the sharply slowing economy, according to its minutes released Tuesday.
On Feb. 12, the seven members of the BOK's monetary policy committee decided to
slash the benchmark seven-day repo rate to a record low of 2 percent, marking the
sixth reduction in four months.
"The real economy is sharply slowing more than expected and as it is unclear
whether the global economy will recover in the near future, the Korean economy is
likely to face a bumpy road," one policymaker was quoted as saying in the
minutes.
The rate cut comes as the South Korean economy is sharply losing steam amid
tumbling exports and weakening domestic demand. The local economy shrank 5.1
percent last quarter from three months earlier, the sharpest fall in 11 years.
One member also suggested that the BOK could consider buying government bonds or
other debts with credit risks as a means of ensuring an aggressive liquidity
injection.
The supply of government bonds will increase as the government plans to sell more
debt to finance a planned additional budget, raising expectations that the BOK
may purchase such bonds.
On March 12, the BOK froze the rate in a bid to gauge the effects of reductions
on the economy and brace for a deeper economic downturn. Between October and
February, the central bank slashed the rate by a total of 3.25 percentage points.
The Korean economy is widely expected to post negative growth this year, marking
the first annual contraction since the 1997-98 Asian financial crisis. The next
rate review meeting is slated for April 9.
sooyeon@yna.co.kr
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