South Korea unexpectedly cut rates by 25 basis points – the first backward cut since 2009.

South Korea cut its benchmark interest rate by 25 basis points to 3 percent in a surprise move on Thursday, as the country tries to boost its economy that has seen rapid growth. .

Economists polled by Reuters had forecast the bank would keep rates at 3.25%.

It also marks the first time the BOK has made two back-to-back cuts since 2009. It had cut rates by 25 bps at its last meeting in October.

The Kospi stock index rose 0.18 percent, while the South Korean dollar fell 0.37 percent to trade at 1,393.82.

The rate cut follows a weaker-than-expected GDP reading in the third quarter. South Korea’s third-quarter GDP rose 1.5% year-on-year, below the 2% forecast by economists polled by Reuters.

The BOK cut its GDP forecast for 2024 to 2.2%, down from a forecast of 2.4% in August. The full-year growth estimate for 2025 was cut to 1.9 percent from 2.1 percent.

The country’s inflation rate has also moderated considerably, with October’s reading at 1.3 percent, the lowest since February 2021.

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