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Summary The BoK monetary policy committee kept the benchmark seven-day repo rate steady at 3.0 percent.
South Koreas central bank kept its key interest rate unchanged Thursday despite a downbeat assessment of the global economy, but analysts said another cut could be on the cards before the end of the year.The Bank of Koreas (BOK) monetary policy committee, in a unanimous decision, kept the benchmark seven-day repo rate steady at 3.0 percent for August.In July the bank announced a surprise cut of 25 basis points, the first reduction in more than three years, as Europes protracted debt crisis and Chinas slowdown weighed on the export-dominated economy.Exports dropped 8.8 percent in July from a year earlier. The economy grew just 0.4 percent quarter-on-quarter in April-June compared with 0.9 percent in January-March.The bank forecast a very moderate recovery globally and said the trend of domestic economic growth had slowed owing to lacklustre exports and domestic demand.Inflation eased in July year-on-year to 1.5 percent, its lowest rate in more than 12 years, and the bank forecast it would stay low for the time being. But in a statement it cited potential risk factors, such as rising international grain prices and increases in local utility fees.Analysts said a back-to-back rate cut could have fuelled bleak international assessments of the prospects for Asias fourth-largest economy. The bank can now wait and see the impact of monetary easing steps (expected) to be taken by the US and Europe before deciding on taking a second rate cut, Kong Dong-Rak, of Taurus Investment and Securities, told Yonhap news agency.The chances for a rate cut next month have increased now, Samsung Securities analyst Ryan Oh told Dow Jones Newswires.Given that the Korean economy is in a downturn, I expect further easing after a cut in September to bring the policy rate to 2.5 percent by year-end.
