South Korea has celebrated its one-year anniversary of record low interest rates, with the country’s central bank keeping monetary policy on hold today.
The Bank of Korea kept its benchmark interest rate steady at the record low 1.25 per cent, having cut them to that level in its May meeting last year. The decision was widely expected by economists.
This is the central bank’s first policy decision since Moon Jae-in was elected president of the country earlier this month.
Mr Moon’s recent proposal for a Won10tn ($8.9bn) stimulus for 2017 and greater budget spending at 7 per cent of annual growth could boost inflation and economic growth in 2018 and beyond, analysts at Bank of America Merrill Lynch said ahead of today’s meeting. That could raise the risk of the BoK commencing a faster policy tightening cycle.