SEOUL, KOREA - Goldman Sachs said on July 21 that the Bank of Korea is likely to lower the benchmark interest rate during the third quarter. Kwon Goohoon, co-head of Korean research at Goldman Sachs Group Inc., predicted that the central bank would cut the rate by 0.25 percentage point in the third quarter, possibly the next month. The previous projection for Goldman Sachs had been there would be no rate change until the year's end.

 

He said, "Korea's economic activities have weakened to a significant degree, with the threat of inflation negligible. The bank's Monetary Policy Committee has turned clearly dovish since the July meeting."

 

According to Kwon, the Bank of Korea would announce a rate cut by 0.25 percentage point once and keep it that way for a while. That's based on the judgment that the state of the economy is not serious enough to warrant two rate cuts in a row.

 

He further said, "The second-quarter GDP growth is projected to be 0.6 percent from the same quarter a year ago, which will be slightly lower than that of the first quarter at 0.9 percent."