S Korea cuts key interest rate to record low

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SEOUL, Dec 11 (AFP): South Korea's central bank today cut its key interest rate to an all-time low, the fourth reduction in just over two months as Asia's fourth-largest economy slows down more quickly than expected.
The Bank of Korea reduced the benchmark seven-day repo rate for December by an unprecedented 100 basis points to three per cent, a surprise to many economists who had predicted a 50 basis point cut.
"This is beyond expectation. It's a very aggressive decision," said Chun Chong-woo of SC First Bank. "It means financial authorities are firmly determined to avoid negative growth."
The central bank has now cut the key rate by 225 basis points since October 9 in a bid to stimulate the domestic economy as exports falter.
"As exports growth turned negative, the economic slowdown is faster than expected... downside risks are great because of the financial market jitters and global economic slowdown," the bank said in a statement.
Central bank Governor Lee Seong-Tae said the export-driven economy was being hit hard by sharp falls in overseas sales.
Exports, which accounted for 38 per cent of gross domestic product last year, dropped more than 18 per cent year-on-year in November-the largest fall in percentage terms since December 2001.
"The economic downturn has accelerated sharply over the past few months. Domestic consumption and investment have been in a slump since the beginning of this year, but the slowdown has come sooner than expected," Lee told journalists.