Bank of Korea keeps base rate unchanged at record low level

The Bank of Korea kept its policy on hold today for the fifth consecutive month. The Monetary Policy Board of the central bank decided to leave the base rate unchanged at the record low level of 1.25 percent.

According to the central bank’s monetary policy statement, the Board considers that the economic recovery trend in the U.S. has been sustained and that China’s economy has kept its moderate pace of expansion. The Monetary Policy Board projects that the global economy would continue with its moderate rebound going forward, while being impacted by “factors such as changes in US monetary policy, the directions of the new US government’s economic policies, the uncertainties related to Britain's exit from the European Union, and economic conditions in emerging market countries”.

On the domestic economy front, the Board projects that the economy would sustain its modest growth trend going forward, consistent with a rebound of the global economy, but in view of recent alterations in domestic and external conditions judges the uncertainties around the growth path to have increased further.

Meanwhile, the consumer price inflation is expected to rise gradually, thanks to the weakening influence of the low oil prices. South Korea’s inflation had accelerated to 1.3 percent in October, mainly because of the expiration of a temporary cut in electricity fees.

The statement mentioned that the Board would conduct monetary policy in order to guarantee continuation of recovery of economic growth and that the consumer price inflation approaches the target level in the medium term horizon. The Board would be keeping a close watch on the uncertainties in domestic and external conditions and their impacts, trends of rise in household debt and any changes in the US Fed’s monetary policy.