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(LEAD) BOK holds key rate steady at 1.25 pct in Oct.

All News 10:19 October 13, 2016

(ATTN:UPDATES background in last 3 paras)

SEOUL, Oct. 13 (Yonhap) -- South Korea's central bank held its policy rate steady for October on Thursday, extending its wait-and-see mode to four straight months after sending the key rate to a record low level to strengthen growth for Asia's fourth-largest economy.

In a widely expected move, the monetary policy board of the Bank of Korea (BOK) voted to keep the key rate at 1.25 percent.

In June, the central bank made a surprise rate cut, citing a need to support the economy.

South Korea's exports backtracked 5.9 percent from a year earlier in September due mainly to sluggish shipments of cars and mobile devices. Outbound shipments came to US$40.9 billion last month, down from $43.4 billion for the same month last year, according to government data.

The decision by the BOK board is in line with an earlier poll conducted by Yonhap Infomax, the financial news arm of Yonhap News Agency, in which all of the 14 economists surveyed forecast the central bank to freeze the key rate in October.

Bank of Korea Governor Lee Ju-yeol also said last week that the room to maneuver in monetary policy is "relatively limited," citing sharply increased household debt in Asia's fourth-largest economy.

South Korea's household debt reached an all-time high of 1,257.3 trillion won (US$1.11 trillion) as of the end of June due to record-low interest rates and strong demand for new apartments. It's one of the highest household debt levels in the world compared to income levels.


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