BOK expected to hold policy rate steady in May: Moody's Analytics

By a2016032

Published : May 21, 2017 - 09:34 Updated : May 21, 2017 - 09:34

South Korea's central bank is expected to hold its key rates steady this month due to weak domestic spending, a report by Moody's Analytics said Sunday.

The Bank of Korea kept its policy rate at an all-time low of 1.25 percent for the 10th consecutive month in April to bolster Asia's fourth-biggest economy.

(Yonhap)

The leading provider of economic analysis, said the BOK will "likely stand pat" on rates at the monetary policy meeting set for Thursday, noting further easing is off the cards as it would spur demand for credit.

"Domestic conditions are weak despite improvement on the export front. Subdued employment growth is weighing on wages, and combined with high private debt, this is hampering spending," Moody's report claimed. "We expect the BOK to stand pat through 2017 before stronger inflation prompts hiking in 2018."

Separately, it said South Korea's recent presidential election likely boosted consumer confidence further in May as it provided some clarity to government policy after a political scandal in late 2016.

"The BOK's consumer sentiment index likely ticked up to 102.8 from 101.2 in April, as households feel more optimistic about future economic conditions," Moody's said. "This will likely boost both consumer and business confidence, supporting economic growth." (Yonhap)