BOK freezes key rate at record low of 1.5 % in Nov.

Published : Nov 12, 2015 - 11:25 Updated : Nov 12, 2015 - 11:29

BOK Gov. Lee Ju-yeol presides over a meeting of the monetary policy committee in Seoul on Thursday.

South Korea's central bank froze its benchmark interest rate at a record low of 1.5 percent for November on Thursday, as it continues to gauge the impact of its previous rate cuts amid recovering local demand and a looming U.S. rate hike.

This marks the fifth consecutive month the Bank of Korea has kept the policy rate unchanged at the current level since it slashed the rate by a quarter percentage point in June to 1.5 percent.

For the past year, the central bank has cut a total of 1 percentage point to prop up Asia's fourth-largest economy faced with a slump in private spending and overseas demand.

Thursday's decision is in line with an earlier poll by Yonhap Infomax, the financial news arm of Yonhap News Agency, in which 18 out of 19 economists surveyed projected no change in the key rate.

Market watchers said it is difficult for the BOK to make another rate cut this month as the U.S. Fed is widely expected to raise the borrowing costs at its December meeting.

The Fed has said that the world's largest economy is ready to take on a rate hike for the first time in a decade, citing improving employment and other economic data.

Fed Chair Janet Yellen has earlier said that she would increase the key rate within the year.

Also, the BOK had to take cautious action as China, the country's biggest trading partner, seems to be heading for a hard landing.

In the latest economic data, China's consumer price index gained 1.3 percent on-year in October, slowing from a 1.6 percent rise in the previous month.

On the domestic side, the central bank wants to confirm that the South Korean economy is getting on a recovery track, although the central bank revised down the growth forecast for 2015 to 2.7 percent last month from 2.8 percent.

South Korea's economic growth reached a five-year high in the third quarter thanks to a strong rebound in domestic demand, getting out of a deep slump caused by the deadly Middle East Respiratory Syndrome outbreak in May.

The economy grew 1.2 percent on-quarter in the July-September period, the first time in five quarters that growth exceeded the 1 percent mark, while consumer spending rose 1.1 percent from three months earlier, a turnaround from a 0.2 percent drop in the second quarter. (Yonhap)