South Korea’s central bank left its key interest rate at a record low for the ninth straight month yesterday, pledging to maintain low borrowing rates to help extend a recovery in Asia’s fourth-largest economy.
The Bank of Korea decision to keep the benchmark seven-day repurchase rate at 2 percent came at a monthly policy meeting and was in line with expectations.
The bank’s monetary policy committee said in a statement that it would stick to its “accommodative policy stance for the time being with an emphasis on sustaining the recovery of economic activity.”
The wording was broadly similar to last month’s statement.
South Korea’s economic recovery, rising housing prices and the decision last month by Australia’s central bank to lift rates had created expectations the Bank of Korea might raise its rate last month.
However, the bank at the time largely doused speculation an increase would come before the end of the year by offering no fundamental change in wording in its policy statement.
Goldman Sachs’ economist Kwon Goohoon said in a report yesterday that a rate hike would probably come in the first three months of next year and any increases are “likely to be gradual and moderate.”
The central bank slashed the rate six times since more than a year ago to help battle the effects of the global financial crisis.
South Korea has recorded three straight quarters of growth since contracting 5.1 percent in the final three months of last year. It grew 2.9 percent in the third quarter ended Sept. 30, the strongest quarterly performance in more than seven years.
Meanwhile, Beijing will yesterday, despite mounting evidence the world’s third largest economy has rebounded strongly from the global crisis.
“China’s economic recovery trend has continued to consolidate but it still faces a few difficulties and problems,” Wen told a forum in Beijing on the 2010 World Expo in Shanghai.
“We will continue to implement the active fiscal policy and moderately loose monetary policy ... to facilitate the fast and steady growth of the Chinese economy,” he said, according to a transcript of his speech posted on the Shanghai Expo’s Web site.
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