ID :
69173
Sun, 07/05/2009 - 22:19
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Shortlink :
https://oananews.org//node/69173
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Bank of Korea forecast to freeze key rate for July
SEOUL, July 5 (Yonhap) -- South Korea's central bank is expected to hold its key
interest rate unchanged for July as the economy shows no clear signs of a
recovery amid tamed consumer prices, economists said Sunday.
In June, the Bank of Korea (BOK) left the benchmark seven-day repo rate unchanged
at a record low of 2 percent to bolster the economy's rebound. The BOK made six
consecutive rate cuts totaling 3.25 percentage points between October and
February.
The central bank is scheduled to hold a rate-setting meeting on Thursday.
Market watchers based their forecast of a rate freeze on still-weak industrial
activity and relatively stable consumer prices.
"There is a possibility that the country's quarterly economic growth rate may be
lower in the third and fourth quarters than the April-June period," said Shin
Min-young, a researcher at LG Economic Research Institute. "Under such a
situation, the central bank may find it difficult to increase the benchmark
interest rate."
The country's gross domestic product is estimated to have grown 1.7 percent in
the second quarter from three months earlier, higher than an earlier forecast of
a 0.7 percent gain.
In the first quarter of this year, the South Korean economy, Asia's
fourth-largest, expanded 0.1 percent from the prior quarter, barely averting a
technical recession.
South Korea's industrial production remain sluggish though it grew 1.6 percent in
May from April, posting the fifth consecutive monthly increase.
Relative price stability is another reason for the central bank's expected rate
freeze for July, according to analysts.
The country's consumer prices rose 2 percent in June from a year earlier, slowing
from a 2.7 percent on-year advance the previous month. It was the slowest annual
growth since August 2007 when prices rose 2 percent.
In light of the current economic state and price level, the central bank is
likely to raise the key interest rate around year-end at the earliest, they
predicted.
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.
In late June, the government said the economy is expected to shrink 1.5 percent
this year, compared with an earlier estimate of a 2 percent contraction.
(END)
interest rate unchanged for July as the economy shows no clear signs of a
recovery amid tamed consumer prices, economists said Sunday.
In June, the Bank of Korea (BOK) left the benchmark seven-day repo rate unchanged
at a record low of 2 percent to bolster the economy's rebound. The BOK made six
consecutive rate cuts totaling 3.25 percentage points between October and
February.
The central bank is scheduled to hold a rate-setting meeting on Thursday.
Market watchers based their forecast of a rate freeze on still-weak industrial
activity and relatively stable consumer prices.
"There is a possibility that the country's quarterly economic growth rate may be
lower in the third and fourth quarters than the April-June period," said Shin
Min-young, a researcher at LG Economic Research Institute. "Under such a
situation, the central bank may find it difficult to increase the benchmark
interest rate."
The country's gross domestic product is estimated to have grown 1.7 percent in
the second quarter from three months earlier, higher than an earlier forecast of
a 0.7 percent gain.
In the first quarter of this year, the South Korean economy, Asia's
fourth-largest, expanded 0.1 percent from the prior quarter, barely averting a
technical recession.
South Korea's industrial production remain sluggish though it grew 1.6 percent in
May from April, posting the fifth consecutive monthly increase.
Relative price stability is another reason for the central bank's expected rate
freeze for July, according to analysts.
The country's consumer prices rose 2 percent in June from a year earlier, slowing
from a 2.7 percent on-year advance the previous month. It was the slowest annual
growth since August 2007 when prices rose 2 percent.
In light of the current economic state and price level, the central bank is
likely to raise the key interest rate around year-end at the earliest, they
predicted.
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.
In late June, the government said the economy is expected to shrink 1.5 percent
this year, compared with an earlier estimate of a 2 percent contraction.
(END)
