Etelä-Korea - Korkokanta

The Bank of Korea kept its base rate unchanged at 1.25 percent on November 29th 2019, as widely expected, as policymakers assessed the effect of its recent rate cuts. Meanwhile, amid weakening consumption growth and sluggishness in exports and facilities investment, the board lowered economic growth forecast to 2 percent from the previous estimate of 2.2 percent for this year and to 2.3 percent from 2.5 percent next year. Inflation projection was also revised down to 0.4 percent for this year from the previous 0.7 percent. The bank also said it will judge whether to adjust monetary policy accommodation, while carefully monitoring the US-China trade negotiations, geopolitical risks and and financial stability conditions.

The Bank of Korea lowered its policy rate by 25 basis points to its lowest level in two years of 1.25 percent in a 5-2 vote. This was the second rate cut in three months, amid mounting deflationary pressures and a slowdown in the economy, with consumption growth weakening and sluggishness in exports and facilities investment persisting. The bank added that growth this year is expected to fall below the 2.2 percent projection made in July, amid the prolonged US-China trade dispute and the heightened geopolitical risks. Policymakers left the door open for further easing although a split vote on the latest move suggested the next reduction may not be imminent.

The Bank of Korea held the 7-day base rate steady at 1.50 percent during its August meeting, following a 25 bps cut last month. Policymakers noted that the pace of domestic economic growth has remained slow while uncertainties concerning the growth path forecast have further increased, due mainly to the escalation of the US-China trade dispute and the heightened geopolitical risks. Meanwhile, inflationary pressures on the demand side are expected to remain subdued. The bank said it will judge whether to adjust the degree of monetary policy accommodation in the near term, while closely examining any changes in macroeconomic and financial stability conditions.

The Bank of Korea unexpectedly lowered its base rate by 25 basis points to 1.5 percent on July 18th 2019. This was the first adjustment in benchmark rate since November last year and the bank's first rate cut in three years, amid efforts to spur economic growth on the back of rising global uncertainties following a trade dispute with Japan and tariff war between US and China. Policymakers also revised lower 2019 GDP growth outlook to 2.2 percent from an earlier estimate of 2.5 percent, mentioning weak demand at home and abroad and a delayed recovery in the global IT sector. In the first half of the year, the economy is expected to grow by 1.9 percent and by 2.4 percent in the second half. Meanwhile, 2019 inflation rate is estimated to be at 0.7 percent, below an earlier projection of 1.1 percent.

The Bank of Korea held its base rate steady at 1.75 percent on May 31st 2019 in the face of growing risks to the economy, including faltering exports and escalating Sino-US trade tensions. That said, policymakers reiterated they will carefully monitor any changes in the economies and monetary policies of major countries, financial and economic conditions in emerging market economies, the trend of increase in household debt, and geopolitical risks, while examining their effects on domestic growth and inflation.

The Bank of Korea kept its base rate unchanged at 1.75 percent on April 18th 2019, as widely expected. Policymakers reiterated domestic economy will continue to grow at a rate that does not diverge significantly from its potential level and inflationary pressures on the demand side will not be high. That said, amid rising global headwinds and softening exports, the Bank of Korea lowered its economic growth forecast for 2019 to 2.5 percent from an earlier estimate of 2.6 percent made in January. The latest GDP growth outlook is now lower than both Finance Ministry's growth target of 2.6- 2.7 percent and the International Monetary Fund/IMF's forecast of 2.6 percent for 2019. Policymakers also revised down inflation target to 1.1 percent from an earlier of 1.4 percent.