Bank of Korea Gov. Lee Ju-yeol said Tuesday that the central bank could consider an additional cut of the country’s growth outlook for this year, should the ongoing trade tensions with neighboring Japan expand.
“If (Japan’s export curbs) worsen and such consequences have not sufficiently been reflected in the (recently revised) economic outlook, they will certainly deliver a negative impact on our economy,” Lee said in a briefing session of the parliamentary strategy and finance committee.
It is possible that the BOK may further lower its outlook for the nation’s growth pace for this year, in case current situations aggravate, Lee added.
Bank of Korea Gov. Lee Ju-yeol speaks at the parliamentary strategy and finance committee meeting, Tuesday. (Yonhap)
On Thursday, the BOK’s rate-setting Monetary Policy Board revised the growth outlook to 2.2 percent, down 0.3 percent from the conventional 2.5 percent, and cut the base interest rate by 25 basis points to 1.5 percent, taking the first easing action in more than three years.
The BOK chief also suggested that an additional rate cut could be plausible, depending on the development of external factors.
“(The BOK) has stated that it will maintain an easing stance in order to shore up economic recovery,” Lee said.
“But we cannot yet forejudge the possibility of further cuts as external factors such as developments of real economic conditions and liquidity in the global financial market have to be put into consideration.”
Earlier this month, Japan effectuated export restrictions against Korea upon outbound shipments of key materials that are critical for the production of semiconductors and displays. It also gestured to remove Korea from a list of preferential export partners.
Responding to the mounting tensions and downside risks, the BOK set up a task force to monitor the balance and maturity of loans extended by Japanese borrowers.
“(The BOK) is closely monitoring local financial and foreign exchange markets, ready to take immediate measures in case volatility grows,” the central bank said.
Seoul’s trade-reliant economy saw its exports drop to $28.3 billion, shedding 13.6 percent on-year during the first 20 days of this month, according to data compiled by the Korea Customs Service.
By Bae Hyun-jung (email@example.com