SEOUL, South Korea – South Korea's central bank Thursday reduced its key rate for the first time in three years to combat a staggering economy facing further risks from a heated trade dispute with Japan.
The Korea case lowered the key rate by a quarter percentage point to 1.50% after a meeting of its monetary policy committee, which also cut the growth forecast for the country's economy this year from 2.5% to just over 2%.
The bank is slowly exporting and domestic investment, as well as financial market volatility caused by the ongoing trade negotiations between the US and China and Japanese assumptions for some technological exports to South Korea. The bank had raised its rate by 0.25% points in November and lowered its borrowing costs in June 201
The bank said it would "closely monitor developments such as the US-China trade negotiations, Japan's export restrictions, any changes in economies and monetary policy in large countries … and geopolitical risks while examining their effects on domestic growth and inflation. "
The move comes amid a growing line between South Korea and Japan over Tokyo's move to tighten control over the export of photoresists and other sensitive Chemicals for South Korean companies that use them to produce semiconductors and screens for smartphones and TVs.
South Korea says the Japanese trade fronts can damage their export-dependent economy and interfere with global supply chains and plan to file a complaint with the World Trade Organization.