Anchor: The Bank of Korea on Thursday kept its key interest rate steady at three-point-five percent, marking the sixth time in the row that the central bank opted for a freeze. The central bank cited a slowdown in growth and heightened uncertainties, including the prolonged war in Ukraine.
Max Lee has the latest.

Report: The Bank of Korea on Thursday held its key interest rate steady for the sixth straight time at three-point-five percent.

The central bank began its rate freeze in February after delivering seven straight rate hikes from April 2022 to January 2023.

The BOK cited a slowdown in the country’s economic growth and heightened uncertainties, including the prolonged war in Ukraine and rising household debts for its decision, with governor Rhee Chang-yong saying the decision was unanimous, but that five out of six board members remain open to a future hike.

This comes as the central bank noted that although inflation is projected to continue its downward trend, uncertainties over consumer prices and the growth rate have risen significantly amid tight monetary policies in major economies, as well as heightened geopolitical risks such as the armed conflict in the Middle East.

It further added that the pace of the inflation slowdown will be more moderate than projected, with the latest forecast predicting that inflation will stay over three percent around the end of the year, far exceeding its target rate of two percent.

The bank also touched on the necessity of monitoring household debt growth, with Thursday’s rate freeze coming amid rising household debt as home prices rise in Seoul and other regions on the back of eased loan curbs.

However, economists continue to worry about the widening gap in the interest rates between the BOK and the U.S. Federal Reserve, currently standing at one-point-75 to two-percentage points.

While the Fed froze its benchmark lending rate at the five-point-25 to five-point-five percent range, expectations are that there will be at least one more hike before the end of the year.
Max Lee, KBS World Radio News.