Bank of Korea Holds Interest Rate Steady

SEOUL, KOREA- As widely expected, the Bank of Korea kept the seven-day repurchase rate unchanged at 2.50 percent. The central bank's Monetary Policy Committee held a regular meeting on September 12 and decided that no change would be made on interest rate.It has been four months since the committee cut the rate by 0.25 percentage point.

The latest decision by the Korean central bank is interpreted as an intention by monetary policy makers to wait and see until the U.S. Federal Open Market Committee convenes a regularly scheduled meeting on September 17 when the post-quantitative easing exit strategy is forecast to be unveiled.

The benchmark rate freeze was expected by most market watchers. Earlier the Korea Economic Daily conducted a survey on 20 Hankyung Economic Club members, all of who said "The rate would be on hold this time."

Chang Bo-hyung, senior researcher with Hana Institute of Finance, said, "Although the economy is slowly recovering, there remain uncertainties all around including the emerging market jitters. Besides, monetary authorities are having a hard time to raise the rate due to the household debt overhang."

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