S Korea cbank leaves benchmark interest rate unchanged at 2.5pc
SEOUL: The Bank of Korea left borrowing costs unchanged after an appreciation in the nation's currency moderated economic growth.
Governor Kim Choong Soo and the policy board left the seven-day repurchase rate at 2.5 percent, the central bank said in a statement in Seoul today. All 10 economists in a survey predicted the decision following quarter percentagepoint increases in July and November from a record-low 2 percent. The benchmark rate remains below November's 3.3 percent pace of inflation after today's unanimous vote. Expectations for price gains are also climbing, according to the nation's bond market, signaling the bank may have to resume rate increases.
"I see no change in the BOK's stance to keep raising borrowing costs, which are still very low," said Park Sang Hyun, an economist at HI Investment & Securities Co. in Seoul. Inflation remains a concern, though the central bank will wait until February or March next year before considering another increase as the economy is slowing, Park said. The won rose 0.8 percent to 1,137.40 per dollar as of 12:28 p.m. in Seoul, according to data compiled by Bloomberg.
The currency has appreciated about 35 percent since March last year, the most in Asia. The benchmark Kospi stock index gained 0.8 percent to 1,971.27. The yield on the 3 percent note due December 2013 rose 9 basis points to 3.17 percent, according to Korea Stock Exchange. -PB News