Bank of Korea Pauses After 1-Year Run of Interest Rate Rises

February 23, 2023, 09.04 AM | Source: Reuters
Bank of Korea Pauses After 1-Year Run of Interest Rate Rises

ILUSTRASI. FILE PHOTO: The logo of the Bank of Korea is seen in Seoul, South Korea, November 30, 2017. REUTERS/Kim Hong-Ji/File Photo GLOBAL BUSINESS WEEK AHEAD

KOREA SELATAN - SEOUL. South Korea's central bank kept interest rates unchanged on Thursday, matching market expectations and ending an uninterrupted one-year run of rises.

The Bank of Korea's monetary policy board held its policy interest rate steady at 3.50%, in line with a unanimous expectation by the 42 economists in a Reuters poll.

It said in a statement it would judge whether to raise the rate further after keeping its "restrictive policy stance" for a considerable period. The statement did not make clear whether this meant there would be no interest rate change at all for a considerable period.

Governor Rhee Chang-yong is due to hold a news conference from 0210 GMT.

After the statement was issued, the won was up 0.2% against the dollar on the day and the stock market KOSPI benchmark modestly extended gains to 1%.

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On Thursday, the central bank also issued revised forecasts for this year's economic growth and inflation to 1.6% and 3.5%, respectively, both down from November's projections, which were 1.7% and 3.6%.

The board's decision on monetary policy is the first since Feb. 24 last year in which it has left the policy rate unchanged. After that, it raised the rate by a total of 225 basis points from 1.25%.

The tightening cycle began in August 2021 and has totalled 300 basis points in interest rate rises. Most economists in the same Reuters survey saw the cycle as having ended.

The survey had also suggested the rate would remain unchanged throughout 2023. 

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