The FINANCIAL -- South Korea central bank cut interest rates for the second time this year, as a deadly viral outbreak threatens economic growth and the export-driven economy struggles with flagging global demand, according to Nasdaq.
The Bank of Korea on June 11 cut its benchmark interest rate a quarter of a percentage point to a record low 1.50%. The cut--the central bank fourth since August of last year--comes amid concerns that an outbreak of Middle East Respiratory Syndrome could knock billions of dollars off economic output as consumers and foreign tourists worried about infection stay home.
On June 11, South Korea said 14 more people had been infected with MERS, taking the total to 122. So far, nine people have died after contracting the virus after it was first identified here on May 20 in a man who had traveled to the Middle East.
The outbreak comes as the economy is also under pressure from slumping exports. The country overseas shipments fell for the first five months of this year. In May they plunged 10.9% from a year earlier--the biggest fall in six years.
South Korea economic growth outlook has already been revised lower recently by many forecasters because of faltering exports. The central bank in April cut its growth forecast for this year to 3.1% from 3.4%. South Korea's economy grew 3.3% in 2014.
The rate cut comes despite concerns among Korean policy makers that cutting borrowing costs could exacerbate the country's already high levels of household debt. There are also fears about sudden capital flight ahead of the U.S. Federal Reserve expected move to start raising interest rates later this year.