S.Korea joins global rate cuts, more easing seen

By Cheon Jong-woo and Seo Eun-kyung

SEOUL (Reuters) - South Korea's central bank cut interest rates on Friday for the third time in a month, joining a global wave of monetary easing aimed at shoring up the world economy and calming panicked financial markets.

But the relatively small quarter percentage point cut in the country's benchmark interest rate disappointed some investors, who had hoped for a larger reduction due to rekindled market upheaval around the world on worry about a global recession.

A media official at the Bank of Korea announced its decision to reduce the base rate to 4.00 percent, the lowest seen since early June 2006. Governor Lee Seong-tae is due to explain in detail at a news conference due from 2:20 a.m. British time.

Analysts said the cut disappointed some who had expected up to 50 basis points off the key rate, but added the central bank would remain ready to take further action.

"The central bank may have missed a good chance to cut it deeply," said Park Jong-youn, a fixed-income analyst at Woori Investment & Securities.

"With major countries slashing their rates very deeply and rapidly, we should do it in the same way to maximise the effect. It's not time to save the bullets. The faster and deeper the rate cuts, the better for the economy."

December treasury bond futures more than wiped out early gains of as much as 34 ticks to turn down 3 ticks on the day to 109.44 as of 0151 GMT.

Won and stock market showed a generally muted reaction to the expected decision.