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Bank Of Korea Unexpectedly Cuts Interest Rate To Record Low 1.75%, 24th Central Bank To Ease In 2015

Tyler Durden's picture




 

The currency war salvos just keep on coming.  Moments ago the BOK unexpectedly (the move was predicted by just 2 of 17 economists polled by Bloomberg) cut its policy rate from 2.00% to a record low 1.75%, in what is clearly a full-blown retaliation against the collapse currency of its biggest export competitor, Japan, whose currency has cratered to a level that many in South Korea believe has become a direct subsidy for its competing exports. As such the only question is why the BOK didn't cut earlier.

The Korean Won reacted appropriately, if only in the first millisecond: then it seems the algos forgot what easing is, and the BOK may need to cut again shortly.

And following the surprise rate cut by Thailand earlier today, the "surprise" South Korean rate cut means there are now 24 easing policy actions by central banks in 2015 alone.

Here is the full list of the 24 central bank rate cuts so far in 2015:

1. Jan. 1 UZBEKISTAN

Uzbekistan's central bank cuts its refinancing rate to 9 percent from 10 percent.

2. Jan. 7/Feb. 4 ROMANIA

Romania's central bank cuts its key interest rate by a total of 50 basis points, taking it to a new record low of 2.25 percent. Most analysts polled by Reuters had expected the latest cut.

3. Jan. 15 SWITZERLAND

The Swiss National Bank stuns markets by scrapping the franc's three-year-old exchange rate cap to the euro, leading to an unprecedented surge in the currency. This de facto tightening, however, is in part offset by a cut in the interest rate on certain sight deposit account balances by 0.5 percentage points to -0.75 percent.

4. Jan. 15 EGYPT

Egypt's central bank makes a surprise 50 basis point cut in its main interest rates, reducing the overnight deposit and lending rates to 8.75 and 9.75 percent, respectively.

5. Jan. 16 PERU

Peru's central bank surprises the market with a cut in its benchmark interest rate to 3.25 percent from 3.5 percent after the country posts its worst monthly economic expansion since 2009.

6. Jan. 20 TURKEY

Turkey's central bank lowers its main interest rate, but draws heavy criticism from government ministers who say the 50 basis point cut, five months before a parliamentary election, is not enough to support growth.

7. Jan. 21 CANADA

The Bank of Canada shocks markets by cutting interest rates to 0.75 percent from 1 percent, where it had been since September 2010, ending the longest period of unchanged rates in Canada since 1950.

8. Jan. 22 EUROPEAN CENTRAL BANK

The ECB launches a government bond-buying programme which will pump over a trillion euros into a sagging economy starting in March and running through to September next year, and perhaps beyond.

9. Jan. 24 PAKISTAN

Pakistan's central bank cuts its key discount rate to 8.5 percent from 9.5 percent, citing lower inflationary pressure due to falling global oil prices. Central Bank Governor Ashraf Wathra says the new rate will be in place for two months, until the next central bank meeting to discuss further policy.

10. Jan. 28 SINGAPORE

The Monetary Authority of Singapore unexpectedly eases policy, saying in an unscheduled policy statement that it will reduce the slope of its policy band for the Singapore dollar because the inflation outlook has "shifted significantly" since its last review in October 2014.

11. Jan. 28 ALBANIA
Albania's central bank cuts its benchmark interest rate to a record low 2 percent. This follows three rate cuts last year, the most recent in November.

12. Jan. 30 RUSSIA
Russia's central bank unexpectedly cuts its one-week minimum auction repo rate by two percentage points to 15 percent, a little over a month after raising it by 6.5 points to 17 percent, as fears of recession mount following the fall in global oil prices and Western sanctions over the Ukraine crisis.

13. Feb. 3 AUSTRALIA
The Reserve Bank of Australia cuts its cash rate to an all-time low of 2.25 percent, seeking to spur a sluggish economy while keeping downward pressure on the local dollar.

14. Feb. 4/28 CHINA
China's central bank makes a system-wide cut to bank reserve requirements -- its first in more than two years -- to unleash a flood of liquidity to fight off economic slowdown and looming deflation. On Feb. 28, the People's Bank of China cut its interest rate by 25 bps, when it lowered its one-year lending rate to 5.35% from 5.6% and its one-year deposit rate to 2.5% from 2.75%. It also said it would raise the maximum interest rate on bank deposits to 130% of the benchmark rate from 120%.

15. Jan. 19/22/29/Feb. 5 DENMARK
The Danish central bank cuts interest rates a remarkable four times in less than three weeks, and intervenes regularly in the currency market to keep the crown within the narrow range of its peg to the euro.

16. Feb. 13 SWEDEN
Sweden's central bank cut its key repo rate to -0.1 percent from zero where it had been since October, and said it would buy 10 billion Swedish crowns worth of bonds

17. February 17, INDONESIA
Indonesia’s central bank unexpectedly cut its main interest rate for the first time in three years

18. February 18, BOTSWANA
The Bank of Botswana reduced its benchmark interest rate for the first time in more than a year to help support the economy as inflation pressures ease.
The rate was cut by 1 percentage point to 6.5 percent, the first adjustment since Oct. 2013, the central bank said in an e-mailed statement on Wednesday.

19. February 23, ISRAEL

The Bank of Israel reduced its interest rate by 0.15 percentage points, to 0.10 percent in order to stimulate a return of the inflation rate to within the price stability target of 1–3 percent a year over the next twelve months, and to support growth while maintaining financial stability.

20. March 1, CHINA

China's Central Bank lowered by a quarter percentage point both the benchmark one-year loan rate, to 5.35%, and the one-year deposit rate, to 2.5%. "Deflationary risk and the property market slowdown are two main reasons for the rate cut this time."

21. Jan. 15, March 3, INDIA

The Reserve Bank of India surprises markets with a 25 basis point cut in rates to 7.75 percent and signals it could lower them further, amid signs of cooling inflation and growth struggling to recover from its weakest levels since the 1980s. Then on March 3, it followed through on its promise and indeed cut rates one more time, this time to 7.50%

22. March 4, POLAND

The Monetary Policy Council lowered its benchmark seven-day reference rate by 50 basis points to 1.5 percent, matching the prediction of 11 of 36 economists in a Bloomberg survey. Twenty-three analysts forecast a 25 basis-point reduction, while two predicted no change.

23. March 11, THAILAND

The Southeast Asian country -- a onetime export powerhouse that’s seen its manufacturing mojo dim somewhat in recent years amid historic flooding and political infighting -- lowered its main rate to 1.75 percent.

24. March 11, SOUTH KOREA

In a surprise move, the Bank of Korea cut its policy rate from 2.00% to a record low 1.75%.

 

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Wed, 03/11/2015 - 21:39 | 5880053 fed_depression
fed_depression's picture

Based on this. The US will play possum. There main job over all else is to protect the currency. Looks like dollar is going up maybe another percent tomorrow and the market down. Maybe the Fed will add to it's S&P500 stockpile here who knows.

If there is any doubt among anyone now that the major world problem isn't oversupply from make believe debt growth there's no help for you.

Wed, 03/11/2015 - 22:09 | 5880177 NoVa
NoVa's picture

Race to the Bottom bitchez!

 

 

Wed, 03/11/2015 - 23:22 | 5880329 Mentaliusanything
Mentaliusanything's picture

Yes a race to the Bottom. What bottom I have no idea and what we do when we get there and can go no further is still not thought through

If all devalue No one will win the discount war. History tells us No one ever has won a discount war.

If you all devalue, everything else devalues along with it but mostly Money devalues to its true base, being nothing.

I guess thats why we make Stupid people famous, so we look good.

signed

Paul Krugman

New Keynesian economics

(because Old economics wasn't destructive enough)

 

Wed, 03/11/2015 - 23:15 | 5880224 iofera
iofera's picture

It's just a matter of time before the Fed eases as well.  The stronger dollar can only continue as long as we can take the pain.

Just a guess, but once GDP numbers or equities take a tumble, the Fed will be crying Uncle like everyone else and backing off the tightening mantra.  Then there'll be more QE, possible negative interest rates, and we'll be off to the races.

Wed, 03/11/2015 - 21:37 | 5880060 FieldingMellish
FieldingMellish's picture

Which is why gold is falling... I guess.

Wed, 03/11/2015 - 22:29 | 5880233 iofera
iofera's picture

Relative to other currencies right now, the dollar looks like a shining beacon of strength.

Almost time for another round of beggar-thy-neighbor, Fed style.  When the pain can no longer be ignored, that's what we'll have.  Until then, the narrative is that everything's okay.

Wed, 03/11/2015 - 21:40 | 5880066 Ness.
Ness.'s picture

A surprise is getting a new BMX bike when you were expecting a G.I. Joe with the Kung Fu grip.  

This is not a surprise.  This is the  beginning of the end (again).

Wed, 03/11/2015 - 21:44 | 5880088 Seasmoke
Seasmoke's picture

So I'm starting to lose guidance on what scenarios must take place and how Gold and Silver can ever go up again. I can't believe it. 

Wed, 03/11/2015 - 21:51 | 5880108 FieldingMellish
FieldingMellish's picture

In dollar terms, never. The dollar has reached a permanently high plateau and NOTHING can knock it off its perch. The US stock markets are just going to keep on climbing. PMs and commodities in general are no longer in demand. Don't ask me how this is possible, it's just reality.

Wed, 03/11/2015 - 21:56 | 5880125 Luckhasit
Luckhasit's picture

"PMs and commodities in general are no longer in demand. Don't ask me how this is possible, it's just reality."

Yes sir. Everything is stuffed to the gills and shit ain't selling as fast as it takes to pump it out.  Copper and lead both are in the tank, along with steel and coal. It's ALL fucked.  It's just a matter of how long can they keep up the charade but someone says enough and runs for the hills.

Or bunkers.

Wed, 03/11/2015 - 22:32 | 5880238 iofera
iofera's picture

Gold and silver are going up.  Just not denominated in the dollar.  Once America joins in the fun with more beggar-thy-neighbor policies, metals will be strong in the dollar as well.

In the meantime, let's meet offline and I'll buy your silver for $10/oz.

Thu, 03/12/2015 - 04:49 | 5880659 sessinpo
sessinpo's picture

I am perplexed as to how many ZHs do not realize that PMs went down after 1929 and that the same scenario is playing out again.

Wed, 03/11/2015 - 21:53 | 5880116 Luckhasit
Luckhasit's picture

Welcome to the club buddy.

Wed, 03/11/2015 - 22:02 | 5880153 disabledvet
disabledvet's picture

I'm not sure I want to know why the dollar continues to surge.

 

Not for lack of spending or Moar Woar.

 

"The Price Is Wrong, Bob!" comes to mind.

Wed, 03/11/2015 - 22:10 | 5880183 NoVa
NoVa's picture

Bob Eubanks?

Thu, 03/12/2015 - 04:51 | 5880661 sessinpo
sessinpo's picture

You can't figure out why the dollar is going up? Try paying all your living expenses in PMs and maybe you'll figure it out.

Wed, 03/11/2015 - 22:09 | 5880157 Monetas
Monetas's picture

PM = Peak Metals .... and you thought it meant Precious Metals, didentya ? Bitcoin is a Fed/NSA construct to dishearten and demoralize PM holders ! Hang tough, Bitches .... we will triumph !

Wed, 03/11/2015 - 22:58 | 5880283 Heavy
Heavy's picture

Surprise!

Thu, 03/12/2015 - 01:06 | 5880474 Bunga Bunga
Bunga Bunga's picture

When will Yellen cut?

Thu, 03/12/2015 - 06:24 | 5880726 wstrub
wstrub's picture

Co-ordinated.......NWO coming?

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