BOK Keeps 2.50% Benchmark Rate Unchanged

 

Today's decision may have been based on the judgment that it remains to be seen the effects of the May rate cut and stimulus packages such as the revised supplementary budget. Although there are hopeful signs such as the second-quarter GDP growth rate rising to 1.1 percent, the first time the quarterly growth rate moved in excess of the 1-percent level in nine quarters, the Chinese economy's continuing slowdown and the lackluster domestic consumption remain as the biggest obstacles to further growth.

 

Lee Jae-seung, analyst with KB Investment & Securities, said, "As for the U.S. economy, it is likely that its recovery mode will continue with little possibility of the Federal Open Market Committee moving abruptly in its policy stance before the fourth quarter. Unlike any other emerging markets, Korea boasts a relatively stable currency rate and a high trade account surplus, which makes it hard for monetary authorities to change their policy."