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Bank of Korea Keeps Interest Rate Unchanged for Third Time
(MENAFN) The Bank of Korea (BOK) on Thursday kept its key interest rate unchanged for a third consecutive meeting, citing ongoing financial risks including currency volatility and surging housing prices.
Governor Rhee Chang-yong and the BOK’s monetary policy board voted to maintain the benchmark seven-day repurchase rate at 2.50 percent, a move widely expected by markets. According to a Korea Financial Investment Association survey of 100 fixed-income analysts, 85 percent anticipated no rate change this month.
The central bank last reduced its policy rate by 25 basis points in February and May this year, following similar cuts in October and November last year, before freezing rates in July, August, and October. The decision to hold rates steady reflects concerns over widening exchange rate fluctuations and persistent real estate pressures.
The South Korean won averaged 1,391.83 per U.S. dollar in September, slightly weaker than August’s 1,389.66, and briefly breached the 1,400 mark earlier this month, underscoring ongoing currency instability.
Despite President Lee Jae-myung’s new administration rolling out measures to cool property prices since taking office in June, demand for mortgage-backed home purchases remains high, particularly in Seoul.
Household debt at deposit-taking banks rose to 1,170.2 trillion won (821.1 billion U.S. dollars) at the end of September, up 2.0 trillion won (1.4 billion dollars) from the previous month — marking the eighth straight monthly increase since February, fueled by steady demand for home loans.
In a statement, the BOK said it would continue to closely monitor financial stability risks, including the effects of property market policies on Seoul’s housing sector, trends in household borrowing, and exchange rate volatility.
Easing pressure to cut rates further came from strong semiconductor exports and improving consumer confidence, bolstered by a rising stock market.
Exports — which make up roughly half of South Korea’s economy — surged 12.7 percent year-on-year in September to a record 65.95 billion U.S. dollars, while chip exports soared 22.0 percent to an all-time high of 16.61 billion dollars.
Governor Rhee Chang-yong and the BOK’s monetary policy board voted to maintain the benchmark seven-day repurchase rate at 2.50 percent, a move widely expected by markets. According to a Korea Financial Investment Association survey of 100 fixed-income analysts, 85 percent anticipated no rate change this month.
The central bank last reduced its policy rate by 25 basis points in February and May this year, following similar cuts in October and November last year, before freezing rates in July, August, and October. The decision to hold rates steady reflects concerns over widening exchange rate fluctuations and persistent real estate pressures.
The South Korean won averaged 1,391.83 per U.S. dollar in September, slightly weaker than August’s 1,389.66, and briefly breached the 1,400 mark earlier this month, underscoring ongoing currency instability.
Despite President Lee Jae-myung’s new administration rolling out measures to cool property prices since taking office in June, demand for mortgage-backed home purchases remains high, particularly in Seoul.
Household debt at deposit-taking banks rose to 1,170.2 trillion won (821.1 billion U.S. dollars) at the end of September, up 2.0 trillion won (1.4 billion dollars) from the previous month — marking the eighth straight monthly increase since February, fueled by steady demand for home loans.
In a statement, the BOK said it would continue to closely monitor financial stability risks, including the effects of property market policies on Seoul’s housing sector, trends in household borrowing, and exchange rate volatility.
Easing pressure to cut rates further came from strong semiconductor exports and improving consumer confidence, bolstered by a rising stock market.
Exports — which make up roughly half of South Korea’s economy — surged 12.7 percent year-on-year in September to a record 65.95 billion U.S. dollars, while chip exports soared 22.0 percent to an all-time high of 16.61 billion dollars.
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