SEOUL, KOREA - The Monetary Policy Committee of the Bank of Korea on November 13 kept the benchmark rate unchanged, as widely expected in the market. It was interpreted that the monetary authorities are now in a wait-and-see mode after cutting the rate twice in August and October.

 

The committee held a regular monthly meeting in the morning of the 13th and decided to freeze the rate at 2.00 percent. The committee members agreed that it will take at least six months to see an effect of a rate cut decision.

 

Some analysts had predicted that there will be a second rate cut in two consecutive months as the October export figure hit a record-high level of US$51.8 billion. But the current benchmark interest rate of 2.00 percent is the same as that in the 2008 global financial crisis, which makes it hard for the monetary policy makers to move downward easily.

 

Most in the market also expected there would be no rate change this time. In a survey by the Korea Financial Investment Association on 200 bond analysts and traders held earlier, 99.0 percent of the respondents said no change.

 

Chung Kyung-hee, analyst with Shinhan Investment Corp., said, "The focus of the government's policy goal has now shifted to currency rate from interest rate. In order to fine-tune the currency rate, the government needs a stable interest regime. To that end, the Bank of Korea will likely to maintain the current interest rate for the time being as a way to stabilize the bond market."

 

Article provided by The Korea Economic Daily