1) (economic recesstion)

2) (Global exchange rate wars)

3) (Danger of Deflation)

Dear Alex. This is interpretation of your presentation part.

1 slide
First, you will explain about what the base interest rate is briefly. The base interest rate is one
countrys policy interest rate which is standard of various rate of interest, like bonds.

Then, how and what institution decide to cut interest rate? In case of Korea, there is a monetary policy
committee to decide standard interest rate. they have a conference annually, concerning trend of price
of product monthly, interanl and external economy situations and conditions of financial market.

2 Slide
There are three major reasons why Korea bank decide to cut interest rate.

Fisrt of all, Economic recession

the decrease of consumption and investments in facilities makes internal economy recess.

Second one is Global exchange rate war.

Since Europe and Japan use quantitative easing, there are a lot of currencies. it causes appreciate of
Won against and . Therefore Koreas export environment is deteriorated continually.
The global currency authorities tried to depreciate value of their own currency, so it lead to damage
Koreas export.

Last one is danger of deflation.

According to the report which is conducted by The statistics Korea, industrial production decrease by
1.7% than previous month and mining and manufacturing industrial production also decrease by 3.7%.
it is the biggest decline.
In addition, the rate of rise of the consumer price is about 0% (exactly 0.52%) for three consecutive
months. It means danger of deflation.

3 Slide
This is summary of Global currency war.

1. The Japan started to use initial quantitative easing. Then Eurozone implemented same policy
indefinitely and even lowered their base interest rate up to -%.

2. This influence spread to neighboring countries. They joined this trend.

3. Finally, as India, Singapore, Austrailia and China participate in this war, it has direct impact on
Koreas decision of cutting interest rate.

From Do Yeon Kim and Jeong Soo Yun