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Bloomberg
The Bank of Korea (BoK) stayed the course amid rising uncertainty, leaving its benchmark interest rate unchanged in a unanim-ous decision.
The central bank is balancing concerns including record household debt and recent weak domestic economic data with external risks such as rising US interest rates and global emerging-market instability.
Governor Lee Ju-yeol described uncertainties as high, and as the reason the central bank kept the seven-day repurchase rate at 1.5 percent, unchanged since a hike in November.
“While South Korea’s economy won’t deviate greatly from April forecasts, the BOK decided to maintain rates considering
that inflationary pressures aren’t big on the demand side and that there is still a high level of uncertainty in internal and external conditions,†Lee said.
Recent data has raised concerns about the outlook for the economy, and with inflation below the 2 percent target, all 18 analysts surveyed by Bloomberg expected the BOK to stand pat. Some BOK watchers have recently pushed back their projections for the next rate increase, with the majority seeing a hike in the third quarter of this year. A few see no further action in 2018.
The won, which has been moving within a range of 1,055 to 1,092 this year, traded little changed at 1079.35 per dollar as of 12:41 p.m. in Seoul. While the won hasn’t succumbed to the volatility that’s hot some emerging-market currencies, Lee reiterated that foreign-exchange policy was unchanged and Korea can stabilize markets if needed.