SEOUL- South Korea’s central bank kept its benchmark rate steady and struck an upbeat tone, citing signs of an improving trade environment and a resilient domestic backdrop that suggested policymakers are in no rush to lower borrowing costs again.
Annual inflation hit a record-low last year but analysts are split on whether there would be further easing, not least because a deal signed by the United States and China on Wednesday could entrench a recovery in the Korean economy.
The Bank of Korea’s policy board voted 5-2 to keep the base rate steady at 1.25 percent, as predicted by all 33 analysts surveyed by Reuters, standing pat for a second meeting following two reductions in July and October last year.
Analysts characterized the statement as less dovish than the previous one in November as it included a fresh clause highlighting better capital investment and concerns over surging home prices.
“The statement suggests policymakers are seeing a rebound in growth sentiment. It’s more hawkish than the previous one but doesn’t deviate too much,” said Paik Yoon-min, fixed-income analyst at Kyobo Securities, who sees one rate cut in 2020. – Reuters