[THE INVESTOR] Korea’s benchmark interest rate could be slashed to below 1 percent this year due to Britain’s decision to leave the European Union, Nomura Financial Investment said on July 1.
Kwon Young-sun, an economist at the firm said that the Bank of Korea is likely to cut the key rate by 25 basis points twice within 2016 to 0.75 percent from current 1.25 percent.
On June 9, the BOK took its key seven-day repo rate to 1.25 percent from a previous level of 1.5 percent, the first cut in 12 months.
“In the aftermath of Brexit, Asian countries will have to revise down their economic growth rate,” he said during a press conference held in Seoul.
Nomura forecast Korea’s GDP growth will be slashed by 0.3 percentage point this year from previously estimated 2.5 percent.
The country’s exports will further deteriorate in the second half as the Brexit fallout could shake up global trade, Kwon said.
He added that the event will deal a blow to Hong Kong, Singapore and Taiwan the most among Asian countries.
By Park Han-na (
hnpark@heraldcorp.com)
