Bank of Korea leaves base rate unchanged at 1.25 pct

The Bank of Korea, South Korea’s central bank, today left the key policy rate unchanged at its record low level during its meeting, consistent with consensus expectations. The Monetary Policy Board of the central bank kept the Base Rate on hold at 1.25 percent.

The Monetary Board projects that even if the global economy is likely to continue with its weak recovery, the South Korean economy will be impacted by factors such as alterations in the monetary policies of major nations, the uncertainties related to the Brexit vote and the emerging market nations’ economic conditions.

With the available data, the Board believes that the economic recovery trend in the US has been sustained and that China’s economy has continued to keep its moderate rate of growth. But the recovery in the euro area economy has eased.

According to the monetary policy board, the South Korean economy is likely to sustain its modest growth trend going forward, thanks to the expansionary macroeconomic policies. However, the uncertainties around the growth path are high given the domestic and abroad economic conditions. On the inflation front, the board projects that the consumer price inflation would continue to be at lower level for some time and then slowly accelerate as the impacts of the low oil prices wane.

The central bank’s post meeting statement mentioned that the board will conduct monetary policy to guarantee the continuation of economic growth recovery and inflation reaching the target level in a medium-term horizon. It would also ensure financial stability. The central bank’s monetary board will keep a close watch on the trend of rise in household debt, any alterations in the major nations’ monetary policies and the progress of corporate restructuring.