Published : Aug. 8, 2016 - 09:56
South Korea's central bank is expected to keep its key rate frozen in August, two months after setting it at a record low level to bolster growth in Asia's fourth-largest economy, a poll showed Monday.
In a survey conducted by Yonhap Infomax, the financial news arm of Yonhap News Agency, 13 out of 14 economists polled predicted the Bank of Korea to assume a wait-and-see mode.
Emily Dabbs, an analyst from Moody's Analytics, said the Bank of Korea will likely keep rates on hold at 1.25 percent at its monthly rate-setting meeting scheduled for Thursday.
"We currently expect the central bank to leave rates on hold through the rest of 2016 at 1.25 percent," Dabbs said. "If conditions deteriorate dramatically, there is room for another 25 basis point cut, but we expect this is unlikely at this stage."
Ma Tieying, an economist at DBS in Singapore, also said South Korea's central bank could hold rates at 1.25 percent, noting the better-than-expected data on the country's gross domestic product in second quarter and the improvement in monthly consumption and investment indicators should reduce the pressures facing the BOK to further cut rates in the immediate term.
"Given that a rate cut has been delivered only two months ago and the government's supplementary budget has just been submitted to the parliament for ratification, the BOK would like to wait for some time to review the effects of these stimulus measures on the domestic economy," Ma said.
Nine out of 14 economists surveyed said they expected the central bank to cut its key rate to a new record low of 1 percent in December, citing a need to further boost the local economy.
South Korea's exports, a major driving engine for growth, have dipped for 19 consecutive months since January 2015. (Yonhap)