Data released by the Bank of Korea on October 15 showed that South Korea's import prices fell for the second consecutive month in September on a year-on-year basis due to factors such as the decline in global oil prices and the strength of the won.

　　Preliminary data from the Bank of Korea showed that the import price index fell 2.2% in September from a year earlier, following a 3.5% decline in August. the South Korean import price index fell 3.3% year-on-year in September, compared with a 1.8% year-on-year rise in August.

　　The price of Dubai crude oil, which South Korea uses as a benchmark, stood at $73.52 a barrel in September, down from $77.6 in August, the Bank of Korea said.

　　The won averaged 1,334.82 won per dollar in September, up from 1,354.15 won in August.

　　The data also showed that South Korea's export price index fell 2.3 percent in September from a year earlier, after falling 2.8 percent in August.

　　Import prices are an important factor in determining the trend of South Korea's overall inflation rate. South Korea's consumer price index slowed to 1.6% in September, its lowest level in three and a half years.

　　The Bank of Korea cut its key interest rate by 25 basis points to 3.25% on the 11th for the first time in 38 months due to factors such as a marked slowdown in inflation and still weak domestic demand.

　　The Bank of Korea in August cut its economic growth forecast for this year to 2.4 percent from the previous 2.5 percent due to weak domestic demand caused by high interest rates.

　　Uncertainty about the growth outlook increased compared with August due to a delayed recovery in domestic demand, the BOK said. Future growth is likely to be affected by the pace of domestic demand recovery, economic conditions in major countries and IT export trends.

　　Retail sales data, a measure of consumer spending in Korea, fell 1.3% year-on-year in August, while investment in facilities fell 5.4%. Construction investment also fell 9% due to lower new orders.

　　Bank of Korea Governor Lee Chang-yong said the Fed's sharp interest rate cuts have created an environment in which the Bank of Korea can focus exclusively on domestic factors when implementing monetary policy.

　　While inflation shows a clear stabilizing trend, household debt growth has started to slow down and risks in the foreign exchange market have eased as the government tightens its macro-prudential policies, the Bank of Korea said.

　　Soaring household debt has been one of the main concerns for South Korean policymakers, as high debt could dampen spending. The path of monetary easing by the Bank of Korea is expected to be very slow. The five members of the Bank of Korea's board of directors have said it is appropriate to keep interest rates at current levels for the next three months. The Bank of Korea's final rate meeting of the year is scheduled for Nov. 28th.

　　“We need time to assess the impact of the rate cut on house prices, household debt and other financial sectors, and also to examine how the U.S. presidential election and geopolitical situation will affect the market.” Li Changyong said.