South Korea's central bank keeps interest rates steady for 5th month

According to media reports, South Korea’s central bank, Bank of Korea (BOK) kept its interest rate at a record low of 1.25% for a fifth consecutive month on Friday due to increasing global uncertainty and a political scandal regarding President Park Geun-hye. Many analysts’ expectations were for rates to remain unchanged in a survey conducted by Reuters.

It is reported that the U.S. presidential election result is risky for the Korean economy in the long-term. The governor of BOK Lee Ju-yeol calls for rate hikes in December. However, he is under strain about forecasting what US policies will be from now on.

Lee said that further easing is still possible despite the accommodative monetary policy at present. He also noted that an interest rate hike was needed due to weakening won.

ANZ economists expect that the BOK may cut the rate 25 basis point in the first quarter of the next year. They also stated that the effects of a rate cut will decline if the government does not legislate more structural reforms.