South Korea holds rate on do­mes­tic tur­moil, US doubts

Kuwait Times - - BUSINESS -

South Korea left its key in­ter­est rate un­changed Fri­day, with mar­kets un­nerved by political tur­moil at home and global un­cer­tainty fol­low­ing the shock result of the US pres­i­den­tial elec­tion.

The cen­tral Bank of Korea (BOK) held its bench­mark rate at its record-low 1.25 per­cent for the fifth straight month. In a state­ment, the bank said it would closely mon­i­tor “un­cer­tain­ties in do­mes­tic and ex­ter­nal con­di­tions” over the com­ing months, with a par­tic­u­lar eye on any change in mone­tary pol­icy by the US Fed­eral Re­serve.

The bank said it ex­pected the global econ­omy to main­tain a mod­est re­cov­ery, but warned of the pos­si­ble impact of economic pol­icy changes by the new US ad­min­is­tra­tion and Bri­tain’s exit from the Euro­pean Union. The un­cer­tainty gen­er­ated by Don­ald Trump’s un­ex­pected elec­tion tri­umph has co­in­cided with political paral­y­sis in South Korea where a snow­balling cor­rup­tion scan­dal has left Pres­i­dent Park Geun-Hye fight­ing for her job. The scan­dal, cen­tred on a close per­sonal friend of the pres­i­dent, has seen her ap­proval rat­ings plunge into sin­gle dig­its and weekly mass protests that have seen tens of thou­sands take to the streets to de­mand Park’s res­ig­na­tion.

The Bank of Korea made a sur­prise rate cut back in June, cit­ing the need to sup­port the slug­gish econ­omy. South Korea’s ex­ports, the main­stay of Asia’s fourth largest econ­omy, have strug­gled to emerge from a pro­longed slump, and now there are real wor­ries among ma­jor ex­porters that Trump’s pro­tec­tion­ist cam­paign mes­sage will be­come a re­al­ity. — AFP

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