Anchor: The central bank took a breather from its 17-month rate-hike trend amid signs of a prolonged economic downturn, freezing its key interest rate at three-point-five percent. The bank also revised down its forecasts for both growth and inflation by a tenth of a percentage point.
Choi You Sun reports.

Report: The Bank of Korea(BOK) on Thursday maintained its benchmark interest rate at three-point-five percent to deal with an economic slowdown.

In its rate-setting monetary policy meeting, the central bank decided to freeze the key rate, ending a 17-month period from August 2021 that saw ten rate hikes totaling three percentage points.

The decision came amid growing concerns over a recession as Asia’s fourth largest economy contracted in the fourth quarter last year for the first time in two-and-a-half years, with the gross domestic product shrinking zero-point-four percent from the previous quarter.

However, the rate-setting board left the door open to a possible hike, agreeing to maintain austerity to fend off inflation and pave the way for a future upward adjustment.

BOK Governor Rhee Chang-yong said the panel will closely monitor price fluctuations, the U.S. Federal Reserve's moves, economic recovery in China and the housing market.

The BOK’s decision comes as the minutes from the U.S. central bank’s Federal Open Market Committee(FOMC) meeting from late January to early February suggested that the Fed will likely further raise rates by a quarter of a percentage point next month, heightening concerns about capital outflow from South Korea.

Meanwhile, amid signs of a persistent stagnation at home, the BOK revised down this year's real growth forecast by a tenth of a percentage point to one-point-six percent, staying below the government’s estimated potential growth rate in the two-percent range.

The central bank, which also lowered its inflation projection to three-point-five percent, said the pace of inflation will likely begin to ease up after peaking at around five percent this month.
Choi You Sun, KBS World Radio News.