The Bank of Korea held its benchmark interest rate steady, as signs of stronger growth in the U.S. back its view that the economy will gather momentum.
Governor Kim Choong Soo and his board left the seven-day repurchase rate at 2.5 percent, the central bank said today in Seoul, in line with forecasts of all 16 economists surveyed by Bloomberg News.
An
interest-rate cut three months ago and an extra government budget are
helping to fuel an economy forecast by the central bank to expand next
year at the fastest pace since 2010. Risks include a sluggish property market,
China’s slowdown and the potential for volatile global capital flows
when the U.S. Federal Reserve scales back monetary easing.
“The
central bank is in wait-and-see mode after the May cut, especially as
it’s too early to assess uncertainty over China’s slowdown and U.S.
quantitative easing,” Park Jong Youn, a fixed-income analyst at Woori
Investment & Securities in Seoul, said before the rate decision.
“The Bank of Korea may raise the benchmark interest rate in the second half of next year should the global recovery gain steam.”
South
Korea's economy grew at the fastest pace in more than two years in the
second quarter, a gain of 1.1 percent from the previous three months.
By Eunkyung Seo & Cynthia Kim
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