SEOUL, May 9 (Reuters) - South Korea's central bank cut interest rates for the first time in seven months on Thursday, overthrowing market consensus for a hold but not surprisingly as weak industrial growth suggests the economy is not recovering as quickly as expected.
The Bank of Korea's monetary policy committee cut its base rate by 25 basis points to 2.50 percent, a media official said without elaborating. Governor Kim Choong-soo is due to hold a news conference from 11:20 a.m. (0220 GMT).
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- Reuters survey: 16 out of 26 analysts forecast the Bank of Korea would hold its base rate steady, while the remaining 10 analysts saw a cut.
JUN MIN-KYOO, ECONOMIST, KOREA INVESTMENT AND SECURITIES
'This rate cut means that the Bank of Korea admits that the economy is not as good as they think.'
'I think there will be two more rate cuts this year. I expect rate cuts in July and September.'
'Slow economic growth and sluggish exports are critical for the rate decision. The won's rise is just one of the factors influencing the Bank of Korea's decision. I think foreign exchange rates are more of an issue that the government should take care of.'
YOON YEO-SAM, FIXED-INCOME ANALYST, DAEWOO SECURITIES
'I don't think the Bank of Korea will cut rates further given that today's decision was made after seven months of contraction (in economic activity).
'I think this rate will stay here without any raise. In addition, even if the won rises further and rapidly, I don't think a monetary policy (change) is needed to address that since the won is not one of the major world currencies.'
- June futures on 3-year treasury bonds rose sharply to 107.33 by 0122 GMT, up 0.33 points on the day.
- The won was little changed from earlier levels, quoted at 1,086.2 per dollar versus 1,086.5 at the close of domestic session on Wednesday.
- Seoul stocks extended gains to 1.09 percent to 1,977.77 points.
(Reporting by Christine Kim, Chookyung Kim, Daum Kim; Editing by Choonsik Yoo) Keywords: KOREA ECONOMY/RATES
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