Connect with us
menu

Popular World News

S.Korea central bank holds rates, signals tightening prospects By Reuters

inflation-proof or inflated expectations? By Reuters

ECONOMIC NEWS

S.Korea central bank holds rates, signals tightening prospects By Reuters

© Reuters. FILE PHOTO: A man walks on a nearly empty street amid tightened social distancing rules due to the coronavirus disease (COVID-19) pandemic in Seoul, South Korea, July 12, 2021. REUTERS/ Heo Ran/File Photo

By Cynthia Kim and Joori Roh SEOUL (Reuters) -South Korea’s central bank kept monetary policy unchanged on Thursday but hinted at scaling back easing, taking a small step towards tightening to end its run of record-low interest rates. The Bank of Korea said it will “judge whether it is appropriate to adjust the degree of accommodation,” in a policy statement after keeping the benchmark interest rate at 0.50%, as expected by all 36 analysts surveyed by Reuters. It expects private consumption to temporarily weaken due to the worst outbreak of coronavirus in the country, but kept this year’s growth projection at 4% as seen earlier. Economists expect South Korea to be the first in Asia to raise interest rates. Governor Lee Ju-yeol in June said policymakers will start normalising interest rates this year to address the risk of asset bubbles and as inflation spiked over the central bank’s 2% target. But the emergence of more contagious COVID-19 variants could rule out an imminent tightening, analysts say, as the toughest restrictions yet in place since Monday in the greater Seoul area could delay recovery from its worst slump since 1998. Daily infections, fuelled by the highly infectious Delta variant, exceeded 1,000 for more than a week, the country’s worst coronavirus outbreak so far. “The BOK kept its hawkish tone in the policy statement,” said Yoon Yeo-sam, an analyst at Meritz Securities. “The bank saying it will see if any adjusting is warranted means its earlier plans (for tightening) is likely to be intact.” The BOK has three rate decisions left for this year, the next one due on Aug. 26. A total of 75 basis point cuts since last year and the government’s fiscal support have given South Korea’s economic recovery a head-start, putting the BOK at the forefront of stimulus withdrawal. The BOK sees the economy growing 4% this year, the fastest since 2010, as the recovery in exports gains traction and the job market tightens.
Investors, who ramped up rate hike bets in the past few weeks, are awaiting Governor Lee Ju-yeol’s news conference at 0220 GMT for the names of any dissenters to Thursday’s rate decision. Dissenting votes at the seven-member policy board typically lead to policy change in subsequent months.
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.


Source link

Continue Reading
You may also like...
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

More in ECONOMIC NEWS

To Top
error: Content is protected !!
Top