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1st LD Writethru: S. Korea cuts policy rate from 1.5 pct to 1.25 pct

Xinhua, June 9, 2016 Adjust font size:

South Korea's central bank unexpectedly cut its policy rate by 25 basis points to 1.25 percent on Thursday, a day after the announcement to create 11 trillion-won (9.5 billion U.S. dollars) funds, mainly covered by the bank, to help restructuring shipping and shipbuilding industries.

The rate cut, the first in 12 months, was an unexpected decision as most of experts predicted a rate freeze. According to a Korea Financial Investment Association (KFIA) survey of 200 fixed-income experts, 79.4 percent of respondents predicted a rate on hold this month.

More than 90 percent of the 11 trillion-won restructuring funds will be funded by the BOK loans, which will be provided for state-run banks, such as the Korea Development Bank (KDB) and the Export-Import Bank of Korea (Eximbank). Endit