Tip:
Highlight text to annotate it
X
The Bank of Korea has decided NOT TO ACT.
It kept its key interest rate steady at 2-and-a-half percent this month.
For now Korea's central bank wants to gauge the impact of last month's rate cut on the
local economy.
Arirang's Hwang Ji-hye has the details. The Bank of Korea held back from cutting its key
interest rate any further this month,. as most expected.
Following its monthly monetary policy meeting on Thursday,. the central bank left the rate
unchanged at 2-and-a-half percent. saying it needs time to assess the impact of its
recent rate cut on the local economy.
"We should wait and see how last month's quarter of a percentage point rate cut and the approved
supplementary budget plan affects the economy."
Bank of Korea officials decided on the rate freeze based on predictions. that the local
and global economy will stay on the path of a moderate recovery.
The Korean economy grew zero-point-8 percent in the first quarter this year from the previous
quarter -- the fastest growth since the first quarter of last year.
Experts say. that the central bank is likely to keep its interest rate on hold at least
for this year.
"For now, it is highly likely the rate will remain unchanged this year, unless there's
a major economic breakthrough."
Experts add however,. that the Federal Reserve's possible stimulus pullback. and the yen's
volatility,. remain as downside risks. that could change the interest rate.
The country's inflation rate, meanwhile,. remained in the one-percent range for the
seventh straight month in May,. running far below the central bank's 2-and-a-half to 3-and-a-half
inflation target band.
"The central bank governor says. the B-O-K will continue to closely monitor the impacts
of the government's economic policies on the local economy, including its May rate cut
and the supplementary budget plan. which are both expected to raise the country's growth
rate by zero-point-2 percentage points." Hwang Ji-hye, Arirang News."