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[For QA testing] Bank of Korea holds policy rate at 2.50% a year…sixth straight freeze

Bloomingbit Newsroom

Summary

The Bank of Korea said it would keep the policy rate at 2.50% a year, opting for a sixth straight hold.
It said the decision reflects an upward revision to this year’s growth outlook and consideration of financial-stability risks including the exchange rate and household debt.
All 20 experts expected the rate to be held, and said there is very little incentive to cut the policy rate given macroeconomic conditions.

Forecast Trend Report by Period

*Bank of Korea headquarters. Photo=Hankyung DB*

The Bank of Korea has decided to keep its policy rate at 2.50% a year. After cutting the benchmark rate by 0.25% percentage point from 2.75% a year in May last year, it has now opted for a sixth consecutive hold.

The decision is seen as reflecting a reduced need for rate cuts to support the recovery after the central bank raised its growth outlook this year, while also taking into account lingering factors that could weigh on financial stability, including the exchange rate and household debt.

The move aligns with the results of a survey conducted earlier by The Korea Economic Daily’s Hankyung Economist Club, in which all 20 experts predicted the rate would be left unchanged. Lee Nam-kang, an economist at Korea Investment Holdings, cited the "possibility that this year’s growth outlook could be revised upward" and said, "Given macroeconomic conditions and the state of financial stability, there is very little incentive to cut the policy rate."

Reporter Kang Jin-gyu josep@hankyung.com