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Central bank

Bank of Korea keeps rate steady at record low; signaling no further action

Oct 14, 2020 (Gmt+09:00)

The Bank of Korea has left its policy rate unchanged at a record low of 0.5% as was widely expected, citing a slow economic recovery amid the ongoing coronavirus pandemic.

Following the unanimous decision to keep the benchmark rate steady for a fifth consecutive month at a rate review meeting on Oct. 14, BOK Gov. Lee Ju-yeol said there will be no change in the central bank’s monetary stance for the time being.

Bank of Korea Gov. Lee Ju-yeol presides over the central bank's rate review meeting

“Uncertainty remains higher than at any time in light of a resurgence in virus cases and deepening trade tensions between the US and China,” the governor said during an online press briefing.

"The BOK plans to maintain its accommodative monetary policy stance until the fallout of the COVID-19 pandemic lessens, and the local economy subsequently recovers."

The BOK has delivered two rate cuts so far this year – one in March and another in May – to cushion the economic blow of the pandemic, lowering the base rate by 75 basis points from 1.25% previously.

In August, the central bank slashed its 2020 growth outlook to a sharper-than-expected contraction of 1.3%, citing the coronavirus pandemic.

Asia's fourth-largest economy contracted 3.2% in the second quarter from three months earlier. But in a sign of economic recovery, exports rebounded for the first time in seven months in September. 

Analysts expect the BOK to stand pat on its policy rate until early next year to balance growth with financial stability risks rising from household debt and higher property prices.

Write to Ik-Hwan Kim at lovepen@hankyung.com

In-Soo Nam edited this article.

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