Bank of Korea keeps key interest rate at 1.5%
- 6 years ago
And as widely expected,... the Bank of Korea is holding interest rates steady at one-point-five percent.
The central bank is in a tight spot,... on the one hand it wants to avoid raising borrowing costs for the country's indebted households,... but other areas of the economy are suffering with the rate remaining static.
Kim Hye-sung with more.
The Bank of Korea on Tuesday kept its benchmark interest rate unchanged at one-point-five percent.
This is the second freeze, following a rate hike in November, when the BOK raised its record low interest rate for the first time in over six years by a quarter percentage point.
"The domestic economy is expected to continue its solid growth, but growing protectionist measures add uncertainty. Demand side inflation pressures are expected to be low for the time being, so we unanimously decided to maintain our key rate."
Exports, which grew over 22 percent on-year in January, are likely to continue supporting Korea's economy.
But the BOK said Washington's toughening trade policy and corporate restructuring moves such as GM Korea's factory shutdown are some downside risks.
Investment slowed down and consumer confidence fell in February.
But the consumer sentiment index remains above 100, and Korea's central bank forecast domestic consumption to grow steadily this year.
Inflation, however, is still below the Bank's target of two percent.
"Consumer prices slowed down, rising one-percent on-year in January. In addition, Korea's capital market also saw volatility recently, leading to the Bank's decision to hold rates."
February's monetary policy meeting is the last one chaired by BOK Governor Lee Ju-yeol as his term ends in March.
At the press conference, he said the central bank will make policy decisions by looking at the economy, inflation, household debt and U.S. monetary policy as a Korea-U.S. rate gap could risk capital outflows from Korea.
"Experts say the Bank of Korea will likely raise rates in May or July, with the U.S. Federal Reserve expected to increase rates four times in 2018, the first hike coming as early as March."
Kim Hyesung, Arirang News.
The central bank is in a tight spot,... on the one hand it wants to avoid raising borrowing costs for the country's indebted households,... but other areas of the economy are suffering with the rate remaining static.
Kim Hye-sung with more.
The Bank of Korea on Tuesday kept its benchmark interest rate unchanged at one-point-five percent.
This is the second freeze, following a rate hike in November, when the BOK raised its record low interest rate for the first time in over six years by a quarter percentage point.
"The domestic economy is expected to continue its solid growth, but growing protectionist measures add uncertainty. Demand side inflation pressures are expected to be low for the time being, so we unanimously decided to maintain our key rate."
Exports, which grew over 22 percent on-year in January, are likely to continue supporting Korea's economy.
But the BOK said Washington's toughening trade policy and corporate restructuring moves such as GM Korea's factory shutdown are some downside risks.
Investment slowed down and consumer confidence fell in February.
But the consumer sentiment index remains above 100, and Korea's central bank forecast domestic consumption to grow steadily this year.
Inflation, however, is still below the Bank's target of two percent.
"Consumer prices slowed down, rising one-percent on-year in January. In addition, Korea's capital market also saw volatility recently, leading to the Bank's decision to hold rates."
February's monetary policy meeting is the last one chaired by BOK Governor Lee Ju-yeol as his term ends in March.
At the press conference, he said the central bank will make policy decisions by looking at the economy, inflation, household debt and U.S. monetary policy as a Korea-U.S. rate gap could risk capital outflows from Korea.
"Experts say the Bank of Korea will likely raise rates in May or July, with the U.S. Federal Reserve expected to increase rates four times in 2018, the first hike coming as early as March."
Kim Hyesung, Arirang News.