Bank of Korea expected to hold rate steady

South Korea’s central bank is expected to hold the key rate for the 14th straight month in July despite market anticipation of a rate cut in line with the nomination of a pro-growth finance minister, a poll showed Monday.

A majority of 21 of 22 analysts surveyed by Yonhap Infomax, the financial news arm of Yonhap News Agency, projected the Bank of Korea to freeze the benchmark seven-day repo rate at 2.5 percent at a monthly rate-setting meeting scheduled for Thursday. One analyst projected a 0.25 percentage point cut.

Analysts said the BOK is likely to stand pat on the current rate as economic indicators still point to a modest economic recovery despite sluggish domestic demand, brushing off speculations that the central bank will take action to support the finance minister nominee’s policy plan.

Market anticipation for a rate cut has been building up with the June 13 nomination of ruling party lawmaker Choi Kyung-hwan, with the yield for benchmark three-year government bonds setting a new yearly low. (Yonhap)