Second Rate Cut Crucial

November 2004 | Market Strategy

The Bank of Korea's (BoK) recent decision to cut its overnight call rate by 25bps for the second time this year to a new record low of 3.25% suggests that the Ministry of Finance (MoF) has prevailed in its public battle with the central bank. This split emerged in August, when Finance Minister Lee Hun Jai criticised the BoK's 25bps rate cut in that month as being insufficient (he had advocated a 50bps cut). The key to resolving this struggle has been finding a balance between interest rates which are low enough to stimulate domestic demand - and therefore economic

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