ID :
78996
Tue, 09/08/2009 - 11:17
Auther :
Shortlink :
https://www.oananews.org//node/78996
The shortlink copeid
Bank of Korea to freeze key rate for Sept.: poll
SEOUL, Sept. 8 (Yonhap) -- South Korea's central bank is widely expected to keep its key interest rate unchanged for September for a seventh month as a nascent economic recovery has yet to show itself to be sustainable, a poll showed Tuesday.
Economists at 16 financial institutions predicted that the Bank of Korea (BOK)
will freeze the benchmark seven-day repo rate at a record low of 2 percent on
Thursday, according to the poll by Yonhap Infomax, the financial news arm of
Yonhap News Agency.
The BOK cut the key rate by a total of 3.25 percentage points between October and
February in an effort to put the brakes on a sharp economic freefall.
"The BOK is expected to hold the rate in September as it will take considerable
time for the economy to enter a full-fledged recovery phase while inflationary
pressure is tame," said Lee Sung-kwon, an economist at Shinhan Investment Corp.
A batch of economic data are underpinning growing optimism that the South Korean
economy, Asia's fourth-largest, has passed its worst downturn in more than a
decade, although the economic outlook is still murky.
South Korea's industrial output posted its first annual rise in 10 months in
July, while a set of business and consumer confidence indicators rose to
multiple-year highs in August.
Korea's consumer inflation remained relatively low at 2.2 percent for the month,
though it grew at the fastest pace in three months.
Experts say that discussions over the timing of a rate hike will emerge down the
road, but that it is premature for the BOK to end its softer monetary stance
given the still-fragile economic recovery.
After August's rate-setting meeting, BOK Gov. Lee Seong-tae hinted that the bank
will likely mull raising the rate, saying that it will keep a wary eye on
economic trends during the third quarter.
"Talk about a rate hike is heating up, but I think there is a slim possibility
that the BOK will raise borrowing costs within the year," said Gong Dong-rak, a
fixed-income analyst at Taurus Investment & Securities Co. "Starting in the
fourth quarter, it may consider a rate hike and make a rate increase in the first
quarter of next year."
The Korean economy grew 2.6 percent in the second quarter from three months
earlier, on the back of the government's economic stimulus package. The BOK said
the effects of strong fiscal spending could wane down the road, which may cause
second-half growth to slow down.
The government has reiterated that it will stick to its "expansionary" economic
policy, as it is too early to say that the economy is making a full recovery.
sooyeon@yna.co.kr
(END)
Economists at 16 financial institutions predicted that the Bank of Korea (BOK)
will freeze the benchmark seven-day repo rate at a record low of 2 percent on
Thursday, according to the poll by Yonhap Infomax, the financial news arm of
Yonhap News Agency.
The BOK cut the key rate by a total of 3.25 percentage points between October and
February in an effort to put the brakes on a sharp economic freefall.
"The BOK is expected to hold the rate in September as it will take considerable
time for the economy to enter a full-fledged recovery phase while inflationary
pressure is tame," said Lee Sung-kwon, an economist at Shinhan Investment Corp.
A batch of economic data are underpinning growing optimism that the South Korean
economy, Asia's fourth-largest, has passed its worst downturn in more than a
decade, although the economic outlook is still murky.
South Korea's industrial output posted its first annual rise in 10 months in
July, while a set of business and consumer confidence indicators rose to
multiple-year highs in August.
Korea's consumer inflation remained relatively low at 2.2 percent for the month,
though it grew at the fastest pace in three months.
Experts say that discussions over the timing of a rate hike will emerge down the
road, but that it is premature for the BOK to end its softer monetary stance
given the still-fragile economic recovery.
After August's rate-setting meeting, BOK Gov. Lee Seong-tae hinted that the bank
will likely mull raising the rate, saying that it will keep a wary eye on
economic trends during the third quarter.
"Talk about a rate hike is heating up, but I think there is a slim possibility
that the BOK will raise borrowing costs within the year," said Gong Dong-rak, a
fixed-income analyst at Taurus Investment & Securities Co. "Starting in the
fourth quarter, it may consider a rate hike and make a rate increase in the first
quarter of next year."
The Korean economy grew 2.6 percent in the second quarter from three months
earlier, on the back of the government's economic stimulus package. The BOK said
the effects of strong fiscal spending could wane down the road, which may cause
second-half growth to slow down.
The government has reiterated that it will stick to its "expansionary" economic
policy, as it is too early to say that the economy is making a full recovery.
sooyeon@yna.co.kr
(END)
