South Korea’s central bank maintained its key interest rate, as widely expected, after lowering it by a quarter-point last month to revive economy.
The Monetary Policy Board of the Bank of Korea, on Friday, decided to leave the base rate unchanged at 1.50 percent. The decision came in line with expectations.
The bank had reduced its rate by 25 basis points in July, which was the first reduction since 2016.
At the meeting, policymakers observed that uncertainties concerning the growth path forecast have further increased mainly due to the escalation of the US-China trade dispute and the heightened geopolitical risks.
Consumption growth has weakened and the sluggishness in exports and facilities investment continued, the bank noted. Domestic economic growth is forecast to moderate.
Nonetheless, the bank said among the upside risks to the growth outlook is an improvement in domestic demand thanks to a strengthening of government policies to shore up the economy.
As the Bank of Korea sounded more bearish on the outlook for the economy, Alex Holmes, an economist at Capital Economics, said he continues to expect more easing this year, with another 25 basis point cut in October.
The central bank forecast consumer price inflation to fluctuate for some time at the lower-zero percent level as downside risks to the path projected in July have increased, and then run at the low- to mid-1 percent level from next year.
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