Bank of Korea keeps rates on hold as political uncertainty churns
[SEOUL] South Korea's central bank stayed its hand for a fifth straight month on Friday, as widely anticipated, amid an upswell of global uncertainty and a political scandal involving President Park Geun-hye that may mean trouble ahead for the economy.
A shock win by Donald Trump in the US presidential election earlier this week poses long-term risks the Bank of Korea (BOK) will need to monitor carefully.
The BOK's monetary policy committee kept its base rate unchanged at 1.25 per cent, a media official said without elaborating. Governor Lee Ju-yeol is due to hold a news conference from 11:20 a.m. (0220 GMT).
All but one of 27 analysts polled by Reuters had forecast the central bank would keep its reference 7-day repurchase agreement rate on hold. The one dissenter had seen a cut to 1.0 per cent. "Under Trump, we might see inflation pick up in the US, leading to rates being hiked at a quicker pace. If the US starts tightening sooner than thought, this could impact our economy," said Seo Sang-young, an analyst at Kiwoom Securities.
Mr Seo said rates would be kept unchanged through end-2017 as a result.
Markets were unfazed by the widely expected decision.
South Korea's economy, Asia's fourth-largest, is on course for a recovery, but there are headwinds. Ongoing restructuring of the country's shipping and shipbuilding industries, for example, is expected to result in severe job losses.
Mr Trump's policies have fed fears of a surge in global trade protectionism, which would likely hit major Korean exporters such as Samsung Electronics Co Ltd and Hyundai Motor Co particularly hard.
This would lend a further blow to already-battered exports, struggling to recover after falling for most of the past two years as global demand waned.
REUTERS
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
International
Eurozone at turning point needs consumers to get out and spend
Chinese tariffs could leave cognac makers with too much brandy
Xi begins Europe tour in Paris as Macron seeks to reset ties
South Korea’s probe alleges 211.2 billion won of illegal short trades
Suzhou Industrial Park: The crown jewel of China-Singapore relations celebrates its 30th year
Top US Treasury official to travel to Singapore, Malaysia to discuss sanctions