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BOK holds key rate steady despite signs of sluggish economy

All News 10:00 March 10, 2016

SEOUL, March 10 (Yonhap) -- Bank of Korea (BOK) left its key rate unchanged Thursday, again extending its wait-and-see mode despite signs of a slowing economy and exports.

In a widely expected decision, the central bank's monetary policy board kept the base rate frozen at a record low of 1.5 percent for March.

The BOK has stood pat on the key interest rate since July after delivering four rate cuts in less than a year to help bolster growth in South Korea.

Thursday's decision is in line with an earlier poll by Yonhap Infomax, the financial news arm of Yonhap News Agency, in which 11 out of 19 economists surveyed forecast the central bank to keep its key rate frozen for March.

However, the decision comes amid growing signs of a slowdown in Asia's fourth-largest economy.

South Korea's exports have dropped for 14 consecutive months since the start of last year, plunging 12.2 percent on-year in February alone.

Domestic consumption, one of two main pillars of growth, has also been on the decline with an index gauging the sentiment of consumers here dipping to an eight-month low last month.

Economists have pointed out growing household debt as a factor that may prevent an additional rate cut at least for some time.

The country's household credit, which represents total household borrowing, has reached a record high of 1,207 trillion won (US$993.4 billion) as of end-December.

In the Infomax poll, a whopping 15 out of 17 economists forecast the BOK to lower its key rate to at least 1.25 percent by June.


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