SEOUL, April 6 (Yonhap) -- The Bank of Korea (BOK) is widely expected to hold steady its base interest rate this month and possibly for the rest of the year, as it waits to see the effects of its recent emergency rate cut amid the new coronavirus pandemic, a poll showed Monday.
In a survey conducted by Yonhap Infomax, the financial news arm of Yonhap News Agency, 15 of 18 experts polled expected the central bank to keep its policy rate frozen at its upcoming rate-setting meeting to be held Thursday.
Only three anticipated the BOK may further slash the base rate by a quarter percentage point to 0.50 percent.
"Concerns over an economic slump will further grow due to a sharp increase in the number of COVID-19 infections," noted Shin Dong-soo, an analyst at Eugene Investment & Securities.
Shin, however, expected the BOK to keep the base rate steady at 0.75 percent this week.
"Considering the low level of the base rate that is close to an effective lower boundary and improvements in market liquidity, (the BOK) is expected to focus on micro policy steps to boost liquidity instead of monetary policy," the analyst added.
Thursday's monetary policy board meeting will mark the first of its kind since the BOK delivered a surprise rate reduction of half percentage point in its first emergency meeting in over a decade held on March 16.
"Since the last Monetary Policy Board meeting (held Feb. 26), concerns about a global economic slowdown have deepened, with COVID-19 spreading globally. The board, therefore, judged that further monetary policy accommodation is called for in order to ease volatility in the financial markets and reduce the effects on future economic growth and inflation," the BOK earlier said of the reasons for its emergency rate cut.
"With its active steps taken in advance against an economic slowdown and liquidity crunch caused by COVID-19 in the forms of an emergency rate cut and Korean-style quantitative easing, the BOK is expected to monitor the effect of the preceding measures," Daishin Securities analyst Kong Dong-rak said, expecting a rate freeze this week.
Steps taken by the BOK against the coronavirus outbreak so far include the "unlimited" purchase of local bonds in repo operations to boost market liquidity, considered a "Korean style" of quantitative easing.
The BOK has also signed a US$60 billion bilateral currency swap arrangement with the U.S. Federal Reserve to help foreign exchange liquidity. It has delivered at least $8.7 billion under the currency swap line.
Kang Seung-won, an analyst at NH Investment & Securities, agreed the BOK will first wait to see the effects of its steps.
"With non-traditional monetary policy steps going into effect a week before the rate-setting meeting, the BOK will likely highlight the need for time to see the outcome of those measures," Kang said.
Kyobo Securities analyst Baek Yoon-min and two others anticipated a rate cut this week, citing growing concerns over the spread of COVID-19 in South Korea and around the globe.
"The base rate has been cut by 50 basis points in the emergency meeting, but an additional policy rate cut will be inevitable in that concerns over a global downturn caused by COVID-19 continue to grow," Baek said.
The BOK has slashed its 2020 growth outlook for South Korea to 2.1 percent from the previous 2.3 percent.
Many, including officials from the BOK, expect the central bank to further cut its growth estimate for Asia's fourth-largest economy.
Still, only seven out of the 18 experts polled expected the BOK to further slash its base rate before the end of the year.
South Korea has so far reported 10,237 confirmed cases of COVID-19. Its first case was confirmed on Jan. 20.
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