Seoul

THE Bank of Korea (BOK) cut its forecasts for economic growth and inflation and held its key interest rate at a record low as instability from China reverberates in global financial markets.

Governor Lee Ju Yeol faces the task of spurring inflation to a new 2 per cent target and shoring up the South Korean economy as exports decline. Adding to the challenges, the BOK now has less room for further monetary easing, with household debt at record levels and greater risk of capital outflows as the United States raises interest rates and instability increases in China.