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BOK Holds Benchmark Rate Steady at 3.5% for Third Time

Written: 2023-05-25 13:15:26Updated: 2023-05-25 15:08:04

BOK Holds Benchmark Rate Steady at 3.5% for Third Time

Photo : YONHAP News

Anchor: South Korea's central bank froze its benchmark interest rate at three-point-five percent, keeping the rate steady for the third consecutive time since February. The decision comes amid signs of slowing inflations while reflecting the bank's concern over the protracted stagnation in exports.
Choi You Sun reports.

Report: The Bank of Korea(BOK) on Thursday held the benchmark interest rate at three-point-five percent for the third straight time since February as indications showed a curb in inflation.

The latest decision by the BOK's monetary policy board follows a series of ten consecutive hikes since August 2021.

Inflation dropped to three-point-seven percent in April, posting in the three-percent range for the first time in 14 months.

The rate freeze was most likely affected by a prolonged stagnation in exports, which fell for the seventh consecutive month in April due largely to sagging global demand for semiconductors as the country's trade balance remained in the red for the 14th month.

Escalating global financial risks stemming from the Silicon Valley Bank crisis were also likely a factor.

BOK Governor Rhee Chang-yong said that all board members save for himself called for the door to remain open on another rate hike to three-point-75 percent under the existing policy.

The governor noted the slower-than-expected stabilization of core inflation in the four-percent range as well as the need to further monitor the U.S. Federal Reserve's decision on its rate hike policy and the impact on the foreign exchange market.

Thursday's rate freeze has further widened the difference with the U.S. after the Fed raised its benchmark rate to the five to five-point-25-percent range earlier this month.

The BOK, meanwhile, revised down its outlook for the economy this year from its February forecast of one-point-six to one-point-four percent, while maintaining the inflation forecast for the year at three-point-five percent.
Choi You Sun, KBS World Radio News.

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