ID :
59859
Sun, 05/10/2009 - 17:33
Auther :
Shortlink :
https://oananews.org//node/59859
The shortlink copeid
Bank of Korea to freeze key rate for May: poll
SEOUL, May 10 (Yonhap) -- South Korea's central bank is widely expected to leave
its key interest rate unchanged for the third straight month this week amid signs
that a sharp drop in the economy has moderated, a poll showed Sunday.
All economists at 18 financial institutions predicted that the Bank of Korea
(BOK) will freeze the benchmark seven-day repo rate at a record low of 2 percent
on Tuesday, according to the poll by Yonhap Infomax, the financial news arm of
Yonhap News Agency.
The BOK had made six consecutive rate cuts totaling 3.25 percentage points until
February in a bid to bolster the slumping economy.
"The BOK is forecast to hold the rate in May as the local financial markets have
markedly stabilized and a sharp fall in economic activities eased," said Kim
Jae-hong, an economist at Shinyoung Securities Co.
A set of economic indicators are reinforcing cautious optimism that the Korean
economy may be bottoming out.
Asia's fourth-largest economy grew 0.1 percent in the first quarter from three
months earlier, averting a recession or two straight quarters of contraction. The
Korean economy shrank 5.1 percent in the last quarter of 2008.
In March, the country's industrial output grew 4.8 percent from a month earlier,
maintaining its on-month expansion since January. South Korea posted a record
trade surplus of US$6 billion in April.
The Seoul bourse has risen over 25 percent so far this year and the Korean
currency has gained almost 26 percent to the greenback since it hit an 11-year
low on March 2.
But despite some budding signs of economic recovery, the government struck
cautious notes, saying that bleak external conditions make a sustained economic
recovery difficult to predict.
The job market still remained stagnant, prompting more households to cut back on
their spending. The country's jobless rate rose to 4 percent in March and 195,000
jobs were eliminated from payrolls, the highest since the 1997-98 Asian financial
meltdown.
On concerns over rising short-term liquidity, the Finance Ministry said Thursday
it is not the time to absorb money that authorities have pumped into the markets
given the current economic conditions. But the government added it will closely
monitor the overall money flow.
Experts say the BOK seems to wrap up its monetary easing cycle this year, saying
that an additional rate cut might not come if the economy does not abruptly
deteriorates.
"If momentum for economic recovery is not severely dented or the credit crunch
does not become serious, the BOK would not cut the rate this year," said Shin
Dong-su, an economist at NH Investment & Securities Co.
The BOK predicted that the Korean economy will contract 2.4 percent this year,
the worst performance in 11 years, stung by falling exports and weakening
domestic demand.
sooyeon@yna.co.kr
(END)
its key interest rate unchanged for the third straight month this week amid signs
that a sharp drop in the economy has moderated, a poll showed Sunday.
All economists at 18 financial institutions predicted that the Bank of Korea
(BOK) will freeze the benchmark seven-day repo rate at a record low of 2 percent
on Tuesday, according to the poll by Yonhap Infomax, the financial news arm of
Yonhap News Agency.
The BOK had made six consecutive rate cuts totaling 3.25 percentage points until
February in a bid to bolster the slumping economy.
"The BOK is forecast to hold the rate in May as the local financial markets have
markedly stabilized and a sharp fall in economic activities eased," said Kim
Jae-hong, an economist at Shinyoung Securities Co.
A set of economic indicators are reinforcing cautious optimism that the Korean
economy may be bottoming out.
Asia's fourth-largest economy grew 0.1 percent in the first quarter from three
months earlier, averting a recession or two straight quarters of contraction. The
Korean economy shrank 5.1 percent in the last quarter of 2008.
In March, the country's industrial output grew 4.8 percent from a month earlier,
maintaining its on-month expansion since January. South Korea posted a record
trade surplus of US$6 billion in April.
The Seoul bourse has risen over 25 percent so far this year and the Korean
currency has gained almost 26 percent to the greenback since it hit an 11-year
low on March 2.
But despite some budding signs of economic recovery, the government struck
cautious notes, saying that bleak external conditions make a sustained economic
recovery difficult to predict.
The job market still remained stagnant, prompting more households to cut back on
their spending. The country's jobless rate rose to 4 percent in March and 195,000
jobs were eliminated from payrolls, the highest since the 1997-98 Asian financial
meltdown.
On concerns over rising short-term liquidity, the Finance Ministry said Thursday
it is not the time to absorb money that authorities have pumped into the markets
given the current economic conditions. But the government added it will closely
monitor the overall money flow.
Experts say the BOK seems to wrap up its monetary easing cycle this year, saying
that an additional rate cut might not come if the economy does not abruptly
deteriorates.
"If momentum for economic recovery is not severely dented or the credit crunch
does not become serious, the BOK would not cut the rate this year," said Shin
Dong-su, an economist at NH Investment & Securities Co.
The BOK predicted that the Korean economy will contract 2.4 percent this year,
the worst performance in 11 years, stung by falling exports and weakening
domestic demand.
sooyeon@yna.co.kr
(END)
