Anchor: South Korea's central bank on Thursday froze the key interest rate at three-point-five percent, its eighth consecutive rate freeze since last February. The bank attributed its decision to a slowing downward trend in inflation and persistent growth in household debt.
Choi You Sun reports.

Report: The Bank of Korea(BOK) on Thursday kept the key interest rate steady at three-point-five percent for the eighth consecutive time.

The decision was made during the year's first rate-setting session by the BOK's monetary policy board, maintaining the largest-ever two-percentage-point gap with the U.S. Federal Reserve's rate.

Following ten post-pandemic hikes amounting to three percentage points through January of 2023, the board has left the rate untouched at three-point-five percent since last year's February session.

The BOK apparently took into account inflation, which has stayed above three percent for the fifth straight month, as well as persistent growth in household debt.

With its decision, the central bank did not respond to calls for an adjustment amid concerns over non-performing loans centered around project financing and a plunge in annual growth to the one-percent range for the second consecutive year.

While the BOK and the government expect the economy to expand two-point-one and two-point-two percent, respectively, local institutes and financial group's forecast growth to come in under two percent for the second year, citing a slowdown in consumption due to high interest and inflation.

Following the rate-setting meeting, BOK Governor Rhee Chang-yong said the decision has eased pressure for a further rate hike, citing a continual downward trend in inflation and easing external risks, such as oil prices and the conflict in the Middle East.

Rhee said the decision to freeze the rate was unanimously reached with the members forming consensus that it is premature to consider a rate cut and to maintain austerity until there is confidence that inflation will reach the targeted two percent.

Offering a personal outlook, Rhee said a rate cut will not likely be decided for at least another six months.

As for household debt, the BOK chief said he hopes to see the debt-to-gross domestic product ratio fall under 90 percent even after the end of his term through housing price stabilization or downward adjustments.
Choi You Sun, KBS World Radio News.