Bank of Korea holds rates but easing expectations grow

Bank of Korea holds rates but easing expectations grow

SEOUL: South Korea’s central bank kept interest rates unchanged on Thursday as policymakers watch the effects of existing stimulus measures but the dire state of global trade has kept the possibility of a rate cut this year open.

The Bank of Korea’s decision to hold rates at 1.25 percent was in line with the forecasts of all 24 analysts in a Reuters poll, but expectations are rising the bank will lower them to 1.0 percent by year-end.

“We are reaching our lower bound limit in the base rate, but we still have some (policy) space left,” said BOK Governor Lee Ju-yeol at a press conference after the decision.

But while the policy bias remains accommodative, Lee said the bank may seek counter measures against rapidly rising household debt if needed.

The Bank of Korea has cut interest rates five times since 2014 through June this year as weak exports and a fragile recovery in domestic demand threaten to dent the economy.

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