The Bank of Korea slashed its policy rate by a quarter percentage point to 1.50 percent on Thursday in a surprise move to help spur growth amid prolonged trade tensions.
The rate cut is the first since November when the central bank raised the rate by 25 basis points to 1.75 percent.
The unexpected rate cut follows seven consecutive months of decline in the country's exports, due to Japan's export curbs on key materials for the production of semiconductors and display panels, both key export items of South Korea.
South Korean President Moon Jae-in and the leaders of South Korea's five political parties will meet at the top office this afternoon – for talks on pending issues, including Japan's export curbs against South Korea.
The meeting, scheduled for 4PM to 6PM, Korea time – is the first of its kind since March 2018.
The rival party chiefs will be briefed on the government's strategy on Japan's move and countermeasures to them.
They'll also discuss other pending issues regarding North Korea and a multi-billion dollar supplementary budget bill.
President Moon previously expressed willingness to hold such talks in May to discuss Seoul's efforts to send food aid to North Korea – but the proposal was rejected by the main opposition Liberty Korea Party.
The head of Liberty Korea Party has said he was willing to attend, citing the urgency of the situation with Japan.
Japan has refused to accept South Korea's proposal to hold another working-level meeting by next Wednesday on Tokyo's export curbs.
Citing government sources, Japan's Kyodo News reported on Wednesday that Tokyo believes it will be difficult to have another meeting since mutual trust has been damaged.
A senior official at Japan's Ministry of Economy, Trade and Industry was quoted as saying – "the relationship of trust has been broken."
Kyodo News added the Japanese trade ministry plans to answer South Korea's inquiries about the trade restrictions by email or other means instead of face-to-face meetings.
The International Monetary Fund has warned that global trade tensions are weighing on the world economy.
In its annual External Sector Report on Wednesday, the IMF said all countries should avoid policies that " distort trade" and called for greater urgency in tackling "persistent excess imbalances".
Saying countries should refrain from using tariffs to target bilateral trade balances, it added recent trade actions have had a minimal impact on global imbalances, but higher tariffs have been hurting the world economy.
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Source: Arirang News
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