ID :
105478
Tue, 02/09/2010 - 09:48
Auther :
Shortlink :
https://www.oananews.org//node/105478
The shortlink copeid
BOK expected to freeze key rate for Feb.: poll
SEOUL, Feb. 9 (Yonhap) -- South Korea's central bank is likely to freeze its key interest rate for the 12th straight month in February as uncertainty about the pace of an economic recovery lingers amid heightened global market jitters, a poll showed Tuesday.
A total of 13 economists at 15 financial institutions predicted that the Bank of
Korea (BOK) will keep the benchmark seven-day repo rate, dubbed the base rate,
steady at a record low of 2 percent on Thursday, according to the poll by Yonhap
Infomax, the financial news arm of Yonhap News Agency. Two experts forecast a
rate hike.
"The rate freeze is anticipated for February as euro-zone debt fears increased
jitters in global markets and South Korea's economic growth and inflation have
yet to be strong enough to warrant a rate hike," said Im No-jung, an economist at
Solomon Investment & Securities Co.
South Korea's economy has been on a recovery track, but its growth slowed in the
fourth quarter as exports and private spending declined and fiscal spending
waned. Asia's fourth-largest economy expanded 0.2 percent on-quarter in the final
quarter of 2009, sharply slowing from a 3.2 percent gain in the third quarter.
Concerns about snowballing budget deficits in Greece and other debt-ridden
European countries added to uncertainties. European debt woes roiled global
financial markets last week, denting investors' appetite for risky assets.
Although Korea's consumer prices grew 3.1 percent in January from a year earlier,
the fastest in nine months, a cold spell and heavy snow contributed to a hike in
overall prices.
Some economists, however, are predicting a rate hike for this month, citing the
need to normalize the record low rate.
"In terms of the credibility of the monetary policy, the BOK should take action
(this month) as it has hinted at a rate increase," said Yang Jin-mo, a
fixed-income analyst at SK Securities Co.
Experts said the BOK may not increase borrowing costs in the first half, due to
persisting economic uncertainty at home and abroad.
The country's vice finance minister attended January's rate-setting meeting as an
observer. The government exercised its right to attended the BOK's policy meeting
for the first time in over 10 years, a move which experts say is aimed at
preventing the central bank from hiking the rate in the near term.
The government forecast that the Korean economy will grow 5 percent this year,
but it has reiterated that it will stick to an "expansionary" policy for the time
being as the economic recovery has yet to gain solid footing. It put priority on
boosting job creation this year as many people still feel pinched due to slumping
job markets despite a rebounding real economy.
The BOK cut the key rate by a total of 3.25 percentage points between October
2008 and February 2009 in an effort to put the brakes on a sharp economic
freefall.
sooyeon@yna.co.kr
(END)
A total of 13 economists at 15 financial institutions predicted that the Bank of
Korea (BOK) will keep the benchmark seven-day repo rate, dubbed the base rate,
steady at a record low of 2 percent on Thursday, according to the poll by Yonhap
Infomax, the financial news arm of Yonhap News Agency. Two experts forecast a
rate hike.
"The rate freeze is anticipated for February as euro-zone debt fears increased
jitters in global markets and South Korea's economic growth and inflation have
yet to be strong enough to warrant a rate hike," said Im No-jung, an economist at
Solomon Investment & Securities Co.
South Korea's economy has been on a recovery track, but its growth slowed in the
fourth quarter as exports and private spending declined and fiscal spending
waned. Asia's fourth-largest economy expanded 0.2 percent on-quarter in the final
quarter of 2009, sharply slowing from a 3.2 percent gain in the third quarter.
Concerns about snowballing budget deficits in Greece and other debt-ridden
European countries added to uncertainties. European debt woes roiled global
financial markets last week, denting investors' appetite for risky assets.
Although Korea's consumer prices grew 3.1 percent in January from a year earlier,
the fastest in nine months, a cold spell and heavy snow contributed to a hike in
overall prices.
Some economists, however, are predicting a rate hike for this month, citing the
need to normalize the record low rate.
"In terms of the credibility of the monetary policy, the BOK should take action
(this month) as it has hinted at a rate increase," said Yang Jin-mo, a
fixed-income analyst at SK Securities Co.
Experts said the BOK may not increase borrowing costs in the first half, due to
persisting economic uncertainty at home and abroad.
The country's vice finance minister attended January's rate-setting meeting as an
observer. The government exercised its right to attended the BOK's policy meeting
for the first time in over 10 years, a move which experts say is aimed at
preventing the central bank from hiking the rate in the near term.
The government forecast that the Korean economy will grow 5 percent this year,
but it has reiterated that it will stick to an "expansionary" policy for the time
being as the economic recovery has yet to gain solid footing. It put priority on
boosting job creation this year as many people still feel pinched due to slumping
job markets despite a rebounding real economy.
The BOK cut the key rate by a total of 3.25 percentage points between October
2008 and February 2009 in an effort to put the brakes on a sharp economic
freefall.
sooyeon@yna.co.kr
(END)
