Bank of Korea keeps benchmark interest rate steady at 0.5%
Updated: 2021-02-25 16:42:08 KST
South Korea's central bank has kept its benchmark interest rate unchanged at a record low of point-five percent.
The decision, made during the bank's monetary policy meeting on Thursday, comes despite recovering exports and facility investment, with private consumption still weak from the COVID-19 pandemic.
"The domestic economy is recovering modestly, mainly led by an increase in exports, and the vaccination program is set to begin in our country. But we decided to keep the rate steady, as uncertainty surrounding the economy remains high amid the pandemic."
The Bank of Korea cut its key interest rate to point-7-5 percent last March and lowered it once more to a record-low point-5 percent in May last year.
The rate has remained unchanged since then.
The central bank on Thursday also kept its domestic GDP growth forecast for this year at 3 percent, the same as the previous forecast.
It also left the growth forecast for 2022 unchanged, at 2-and-a-half percent.
"We decided to maintain the growth forecast for this year. This is because even though the global economy is expected to expand, infections in our country this winter were worse than expected, and we're seeing rather subdued employment figures."
On the other hand, the inflation forecast for this year using the consumer price index was raised to 1.3 percent, up three-tenths of a percent from the previous forecast made last November.
But one expert notes it's unclear whether this inflationary trend will continue, as the current trend is not entirely reflective of the overall economic conditions.
"The inflation is centered around groceries and global oil prices, so it's not necessarily inflation reflecting the overall economic conditions it's mostly from the pressures on the supply side."
The BOK reiterated that the future economy is heavily dependent on how the virus situation unfolds, including the speed of vaccine rollouts, and vowed to continue its accommodative monetary policy.
Kim Jae-hee, Arirang News.