South Korea's central bank is forecast to keep its benchmark interest rate unchanged at a record-low this month as it continues to keep its eyes on household debt risks and the impact of previous rate cuts that have so far proved to be ineffective in spurring growth, a poll showed Monday.
  

All 11 analysts and economists surveyed by Yonhap Infomax, the financial news arm of Yonhap News Agency, projected the Bank of Korea (BOK) to hold its policy rate steady at 1.5 percent at its monthly rate-setting meeting Thursday.
  

The central bank has delivered four rate cuts since August last year, sending the key interest rate lower by a total of 1 percentage point. The latest rate cut took place in June as the BOK took pre-emptive action against the economic fallout from the Middle East Respiratory Syndrome  outbreak.
  

The respondents said the central bank is expected to stand pat as concerns over household debt are rising in tandem with a looming U.S. interest rate hike. Growth, they said, will be supported by the government's 11.6 trillion won ($10 billion) stimulus package for the time being.
  

"High levels of household debt are hindering the effectiveness of monetary policy, while the government's fiscal stimulus package should support businesses suffering from the recent MERS outbreak," said Emily Dabbs of Moody's Analytics.
  

The MERS outbreak, which Seoul has declared a de facto end to, hit consumption and consumer sentiment hard, resulting in a 0.3 percent on-quarter growth in the second quarter, which is sharply lower than a 0.8 percent growth in the first quarter.
  

"Household debt is an ongoing problem for Korea. Credit demand has ticked up with the last two rate cuts. This will likely hold back the bank from cutting rates further," said Dabbs.

Others backed the view, saying the BOK is likely to stand pat this month to gauge the policy impact of the government's household debt measures.
  

"A unanimous call for a rate freeze is expected in August in order to check the policy impact of the government's July 22 household debt measure," said Yoon Yeo-sam of KDB Daewoo Securities Co.
  

Last month, the government unveiled a comprehensive package aimed at slowing down the country's 1,099 trillion won and still-growing household debt as household debt risks are feared to spike with the expected U.S. rate hike. The measures include raising the portion of fixed-rate loans and tightening borrowers' repayment abilities.
  

Most of the polled economists projected the BOK's current wait-and-see stance to continue until the end of the year, but the portion of those who forecast an additional rate cut this year increased from the previous month's poll results.
  

While 16 out of 17 analysts expected another rate move later this year in July, four of 11 analysts said the BOK is likely to take further action if growth remains sluggish.
  

Yoon of KDB Daewoo Securities was one of them.
  

"Since the president and policymakers are focusing on downside risk, there are chances of a rate hike in the fourth quarter to stabilize the economy if third-quarter results fail to meet its growth path," he said.
  

Others who backed the view also expected a rate cut in October, citing the country's slumping exports that have sent economic growth lower.
  

"Growth is unlikely to meet the BOK's expected growth path, given a rise in stocks, slowing growth in emerging economies and sluggish growth. A rate cut is expected in October when third-quarter growth figures shape up and the BOK announces its revised economic forecast," said Shin Dong-soo, a fixed-income analyst at Eugene Investment & Securities.
  

The central bank releases its updated economic forecast every three months, in January, April, July and October. (Yonhap)