South Korean consumer confidence slumped to a four-year low this quarter, reinforcing expectations the central bank will cut interest rates in coming months.

　　The consumer-confidence index fell to 77 points from 80 points in the third quarter, the central bank said in Seoul, citing a survey of 2,500 households. A sub-100 index means most respondents expect the economy to worsen in the next six months.

　　South Korean policy makers, who are cutting taxes and interest rates, are counting on a pickup in local demand to sustain economic growth as won gains make the nation's exports less competitive. Households are cutting spending to meet debt payments after many took advantage of relaxed credit controls to borrow beyond their means.

　　"The economy will continue to be dragged down by household debts, sluggish demand and slowing exports," said Oh Sang Hoon, an economist at SK Securities Co in Seoul. "I expect the central bank to cut rates one or two times in the first quarter."

　　The Bank of Korea on November 11 cut its benchmark overnight call rate by a quarter-percentage point for the second time in three months, trimming the rate to a record-low 3.25 percent. All but one of 13 economists and bond analysts polled by Bloomberg News ahead of the bank's December 9 rate-setting meeting forecast borrowing costs would be cut as early as the first quarter.

　　The fourth-quarter reading for the central bank's consumer-confidence index was the lowest since the final quarter of 2000, when the index was 68. A similar monthly index reported by the National Statistical Office slumped to a four-year low in November, sliding for the sixth time in seven months.

　　One in 13 of the nation's 48 million people were three months or more behind on debt payments in November, the Korea Federation of Banks reported on Thursday. Sales at South Korean department stores fell in November at their fastest pace in eight months, the commerce ministry said this month.

　　To help revive demand, the government said it plans to lower personal income tax rates by a percentage point starting next year.

　　(Bloomberg News)