Central bank holds key rate steady at 1.25 % in May: Yonhap

Park Sae-jin Reporter Posted : 2017-05-25 15:06 Updated : 2017-05-25 15:06
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South Korea's central bank on Thursday held its key rate steady in May as the new government is pushing to expand fiscal spending to help revive Asia's fourth-largest economy.

In a widely expected move, the monetary policy board of the Bank of Korea (BOK) voted to keep the key rate at 1.25 percent, extending its wait-and-see approach for the 11th consecutive month. In June last year, South Korea's central bank made a surprise rate cut, citing a need to stimulate the lackluster economy amid a prolonged economic slowdown.

The monetary policy board said it will carry out measures to ensure that the recovery of economic growth continues and consumer price inflation can be stabilized at the target level over a medium-term horizon, while paying attention to financial stability.

"As the inflationary pressures on the demand side are not expected to be high although the trend of domestic economic growth is likely to expand somewhat, the board will maintain its stance of monetary policy accommodation," the board said in an English-language statement.

The decision by the BOK board is in line with a recent poll, in which all out of 200 bond market experts surveyed forecast the central bank would keep its key rate unchanged in May. The freeze came two weeks after liberal President Moon Jae-in took office with a pledge to get 10 trillion won ($8.9 billion) in extra budget this year to help create new jobs in the public sector.

(Yonhap)