SEOUL, KOREA - The Bank of Korea's monetary policy committee held a regularly scheduled meeting in the morning of July 10 and decided to keep the benchmark interest rate unchanged at 2.50 percent. It has been 14 months since the monetary authorities cut the rate by 0.25 percentage point in May 2013.

 

Market observers had expected a further cut in the interest rate following the remarks of the Choi Kyoung-hwan, Finance Minister-nominee, who said one of the government's policy priorities will be on stimulating the economy.

 

In a confirmation hearing, Mr. Choi answered "I somehow agree" to a question by Congressman Park Myung-jae (New Frontier Party) "Do you agree to the new economic policy team's diagnosis that the most important priorities would be deregulation, rate cuts, and higher revised supplementary budget" He also said, "Although rate decisions are an area reserved for the monetary policy committee of the central bank, I'd like to make an effort to narrow the difference in opinion."

 

However, most market participants expected there would be no change in the interest rate because the Bank of Korea provided no hint of rate cut. Earlier in a survey conducted by the Korea Economic Daily on economists with banks, securities firms, and economic think tanks, all 22 respondents said the interest rate would remain at the current level. But 23 percent (5 respondents) said the central bank would try to cut the rate in the latter half.

 

Source : The Korea Economic Daily