The Bank of Korea’s monetary policy board on Thursday froze the base interest rate at a record-low of 1.5 percent, citing soaring household debt, volatility in China market and low crude prices.
The central bank said it decided to keep the key rate unchanged largely due to the nation’s skyrocketing household debt.
As of Sept. 30, South Korea’s total household debt soared to 1,166 trillion won ($962.8 billion), growing at an accelerated pace of 10.4 percent in 2015 from 8.7 percent in 2011.
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Bank of Korea Gov. Lee Ju-yeol opens a policy meeting at the bank‘s headquarters in downtown Seoul on Thursday. (Yonhap) |
The central bank has stood pat on its policy rate since June after the U.S. Federal Reserve raised the key interest rates for the first time in a decade last month.
BOK has cited lackluster economic conditions as the main reason for maintaining its current monetary policy.
A fall in crude oil prices have had a negative impact on the Korean economy, which depends largely on exports.
Prices are expected to remain lower on slow global trade and Iran’s imminent re-entry into the crude market in the first quarter of this year.
Recent stock routs in China is also raising concerns about their impact on the global economy.
Later in the day, the BOK is scheduled to release its latest outlook on the nation’s economic growth later. In its previous quarterly revision, released in October, the central bank slashed its growth outlook for 2016 to 3.2 percent from 3.3 percent
By Chung Joo-won (
joowonc@heraldcorp.com)
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