BOK to freeze key rate amid worsening economy: Goldman Sachs

SEOUL, Aug. 9 (Yonhap) -- The Bank of Korea (BOK), the country's central bank, is expected to freeze its key rate this week due to worsening economic fundamentals and the recent financial turmoil, Goldman Sachs said Tuesday.
The global investment bank said the country's key stock index, the KOSPI, sank 19 percent from its yearly high, and economic conditions of Asia's fourth-largest economy are going from bad to worse.
The latest financial turmoil and worsening fundamentals have been triggered by the downgrade of the U.S. credit rating, concerns over a slowdown in the U.S. economy and debt problems in Europe, it said.
Goldman said private spending and investment may be curbed unless the Korean equity market rebounds sharply.
The central bank is scheduled to hold its monthly rate-setting meeting on Thursday to decide whether to raise the rate, currently at 3.25 percent.
Despite high inflation woes, market experts predict a rate freeze as global economic uncertainty heightened on fears about a global double-dip recession and a U.S. credit downgrade.
The investment bank has predicted that the BOK would raise the rate by a total of 0.75 percentage point by the end of 2012.
sam@yna.co.kr