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BOK keeps benchmark rate unchanged at 1.5% for April.

South Korea's central bank on Thursday held its key rate steady for April as Asia's fourth-largest economy is experiencing low inflationary pressure and a weaker pace of economic recovery.

In a widely expected move, the monetary policy board of the Bank of Korea (BOK) voted to keep the policy rate unchanged at 1.5 percent, extending its wait-and-see stance to five months.

In November last year, South Korea's central bank adjusted up the key rate for the first time in more than six years, citing signs of economic recovery.

The rate freeze was in line with the market consensus, as many anticipated that South Korea's chronic low inflation pressure would keep the central bank from tightening its monetary policy in earnest.

The country's consumer prices climbed 1.3 percent on-year in the first quarter of this year, lower than the BOK's quarterly target of 1.5 percent.

Also, BOK Gov. Lee Ju-yeol has stressed that he would keep monetary policy accommodative to support economic growth. The latest meeting was Lee's first rate decision since he started his second four-year term on April 4.

Market watchers said the South Korean economy will face intensifying downside risks this year, including trade pressure from the United States and potential fallouts from ongoing corporate restructuring efforts.

The government earlier announced a plan to map out a 4 trillion won ($3.75 billion) supplementary budget to ease the tightened job market, as the unemployment rate reached 4.5 percent last month, marking the highest number among all March figures over the past 17 years. In particular, the jobless rate for young adults hit 11.6 percent.

Also, uncertainties are building around the world, and in the Northeast Asian economy, due to the possibility of a trade war between the United States and China. The world's biggest and second-biggest economies are South Korea's No. 1 and No. 2 trade partners.

Moreover, the strengthening of the local currency, which touched a more than three-year high against the U.S. dollar last week, will likely undermine price competitiveness of South Korean goods in the global market. (Yonhap)

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Publication:The Korea Times News (Seoul, Korea)
Geographic Code:9SOUT
Date:Apr 12, 2018
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