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Bank Of Korea Keeps Benchmark Lending Rate Unchanged At 1.25%

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The Bank of Korea's monetary policy board on Thursday voted to keep the nation's benchmark interest rate unchanged at the record low 1.25 percent for the 11th straight month.

That followed last June's surprise rate cut by 25 basis points from 1.50 percent after 10 straight meetings without a move.

"The board considers that the global economic recovery has continued to expand. The global financial markets have shown generally stable movements, although their volatility has risen somewhat due to fluctuations in international oil prices," the bank said.

Low inflation enabled the bank to hold fire as consumer prices receded in April.

Inflation fell to 1.9 percent on year from 2.2 percent in June. It remained in deflation on a monthly basis, easing 0.1 percent after adding 0.1 percent in May.

"The board expects that consumer price inflation will for the time being fluctuate at around the 2 percent level, and for the year as a whole show the level (1.9 percent) projected in April," the bank said.

Much of the other economic data was solid enough to keep the bank from exercising any kind of move.

Industrial production added a seasonally adjusted 0.2 percent on month in May following the 2.2 percent contraction in April.

On a yearly basis, industrial production added just 0.1 percent after rising an upwardly revised 1.8 percent in the previous month (originally 1.7 percent).

South Korea's consumer confidence improved for the fifth successive month in June. The consumer sentiment climbed to 111.1 in June from 108.0 in the preceding month - hitting its highest reading since January 2011.

"The board will conduct monetary policy so as to ensure that the recovery of economic growth continues and consumer price inflation can be stabilized at the target level over a medium-term horizon," the bank said.

by RTT Staff Writer

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