BOK keeps key rate at 1.5%, lowers growth forecast to 2.7% for 2018
Arirang News
2018-10-18
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한은, 기준금리 연 1.5% '동결'…경제성장률 2.7% 하향 조정
South Korea's central bank left its key rate unchanged.
In terms of economic growth, the BOK lowered its earlier estimate, taking into account rising uncertainties in the nation and abroad.
Kim Hye-sung breaks down the digits for us.
The Bank of Korea on Thursday lowered its growth forecast for the local economy to 2-point-seven percent... from July's two-point-nine percent.
That would mark the slowest growth since 2012.
"Our revised growth forecast has been lowered to reflect second-quarter growth. But it remains in line with the potential growth rate. We forecast inflation to be in the mid-to-upper one-percent range."
The central bank forecast growth to decelerate on falling investment and slower export growth due to the escalating U.S.-China trade spat.
It says consumer price inflation will hit 1-point-six percent this year on rising agricultural food and oil prices, closer to its two percent target.
Citing weak job growth and trade uncertainties, the Bank of Korea kept its benchmark interest rate unchanged at one-point-five percent.
The number of newly added jobs in the country fell below the 100-thousand mark for the third consecutive month in September.
But growing household debt and increasing capital market risk is adding pressure on the BOK to lift rates.
Two of the bank's seven board members voted to raise rates on Thursday.
"We are seeing higher financial market volatility. Following the third U.S. rate hike last month, emerging markets and Korea's financial market saw their stock markets tumble. Foreign investers sold off Korean bonds and the won weakened. If financial instability continues, it could result in capital flight and affect Korea's real economy."
October's monetary decision leaves the U.S. interest rate 75 basis points higher than Korea's.
"With the Fed expected to raise rates in December and Korea's economy to slow down further in 2019, experts say the Bank of Korea is highly likely to raise its key rate next month in its final monetary policy meeting this year."
South Korea's central bank left its key rate unchanged.
In terms of economic growth, the BOK lowered its earlier estimate, taking into account rising uncertainties in the nation and abroad.
Kim Hye-sung breaks down the digits for us.
The Bank of Korea on Thursday lowered its growth forecast for the local economy to 2-point-seven percent... from July's two-point-nine percent.
That would mark the slowest growth since 2012.
"Our revised growth forecast has been lowered to reflect second-quarter growth. But it remains in line with the potential growth rate. We forecast inflation to be in the mid-to-upper one-percent range."
The central bank forecast growth to decelerate on falling investment and slower export growth due to the escalating U.S.-China trade spat.
It says consumer price inflation will hit 1-point-six percent this year on rising agricultural food and oil prices, closer to its two percent target.
Citing weak job growth and trade uncertainties, the Bank of Korea kept its benchmark interest rate unchanged at one-point-five percent.
The number of newly added jobs in the country fell below the 100-thousand mark for the third consecutive month in September.
But growing household debt and increasing capital market risk is adding pressure on the BOK to lift rates.
Two of the bank's seven board members voted to raise rates on Thursday.
"We are seeing higher financial market volatility. Following the third U.S. rate hike last month, emerging markets and Korea's financial market saw their stock markets tumble. Foreign investers sold off Korean bonds and the won weakened. If financial instability continues, it could result in capital flight and affect Korea's real economy."
October's monetary decision leaves the U.S. interest rate 75 basis points higher than Korea's.
"With the Fed expected to raise rates in December and Korea's economy to slow down further in 2019, experts say the Bank of Korea is highly likely to raise its key rate next month in its final monetary policy meeting this year."
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