South Korea just made a surprise interest rate cut

South Koreans wearing traditional clothes in traditional folk game on a Lunar New Year day celebration in Seoul. Photo: Getty

And now South Korea is joining the monetary easing party.

The Bank of Korea just lowered the seven-day repurchase rate by 25 basis points to 1.75 percent, a move that surprised the market which was expecting no change.

South Korean inflation is running at its slowest pace in 15 years.

Bloomberg reports this makes more than 20 central banks around the world – including Australia – that have eased policy this year.

The current low rates of inflation around the world have led policymakers to put downward pressures on their currencies to increase import costs and stoke price rises in their domestic markets.

Thailand also cut its benchmark rate by 25 basis points to 1.75% this week. Australia’s RBA surprised the market last week by not cutting rates.

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