SEOUL, Mar 26: South Korea’s central bank raised the ceiling on its key loan facility for small and medium-sized businesses by 5.0 trillion won ($4.53 billion) on Thursday as part of its push to boost the economic recovery. Once the change becomes effective on April 1, the ‘bank intermediated lending support facility’ will stand at 20.0 trillion won, the Bank of Korea said. It said the raised ceiling, along with the three interest rate cuts it has made since August last year, should support capital investment in Asia’s fourth-largest economy. The decision was taken because the pace of economic recovery was still not satisfactory despite ample liquidity in markets, it said in a statement.
Bank of Korea Governor Lee Ju-yeol said this month, after a cut in the policy rate to a record low 1.75 percent, that the central bank planned to increase loans available to small businesses.
As well as increasing the amount available for lending, the central bank said it would lower borrowing rates for some of the programmes within the facility by 0.25 percentage point to reflect the cut in the base rate.
The Bank of Korea decribed the cut in interest rates this month as a pre-emptive move to keep the recovery from faltering as it had detected worrying signs in economic indicators released early in the year. ($1 = 1,104 won)
(AGENCIES)
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