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Bank Of Korea Holds Benchmark Interest Rate Steady 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 13th 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 will maintain its accommodative policy stance while closely checking future economic growth and inflation trends. In this process it will also carefully monitor any changes in the monetary policies of major countries, conditions related to trade with major countries, the trend of increase in household debt, and geopolitical risks," the bank said in a statement accompanying the decision.

Low inflation enabled the bank to hold fire as consumer prices remained low in September.

Inflation was up 0.1 percent on month in September, slowing from the 0.6 percent gain in the previous month.

On a yearly basis, inflation advanced 2.1 percent, down from 2.6 percent a month earlier.

"The Board expects that consumer price inflation will be in the upper-1% range for some time, in line chiefly with the disappearance of the base effect from the reduction of electricity fees last year, and then gradually approach the target level," the bank said.

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

Export prices in South Korea were up 0.9 percent on month in September, accelerating from 0.6 percent in August. On a yearly basis, export prices climbed 10.9 percent, up slightly from 10.8 percent in the previous month.

Import prices picked up 1.7 percent on month and 10.7 percent on year in September after gaining 1.6 percent on month and 9.1 percent on year in August.

Industrial production in South Korea added a seasonally adjusted 0.4 percent on month in August. That followed the downwardly revised 1.7 percent gain in July (originally 1.9 percent).

On a yearly basis, industrial production added 2.7 percent - beating forecasts for a gain of 2.2 percent following the downwardly revised 2.0 percent increase in the previous month (originally 2.2 percent).

"The Board judges that the solid trend of domestic economic growth has continued, as exports and facilities investment have sustained their high rates of increase and private consumption has also picked up moderately," the bank said.

by RTT Staff Writer

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