South Korea’s central bank yesterday unexpectedly left its key interest rate unchanged because of growing uncertainty about the strength of the global economic recovery.
Contrary to market predictions, Bank of Korea Governor Kim Choong-soo and fellow policymakers froze the benchmark seven-day repo rate for this month at 2.25 percent.
In July, the bank raised the rate for the first time since the start of the world economic downturn, increasing it to 2.25 percent from a record low of 2 percent to forestall inflationary pressures.
“The [South] Korean economy is expected to continue its solid growth, aided by robust exports and recovery in consumption and facility investment, but the possible economic slowdown in major economies and the eurozone debt crisis will act as downside risks to growth,” the bank said in a statement.
It said it would “take into account overall financial and economic conditions at home and abroad” in future policy decisions.
Kim told reporters the current rate was not “desirable,” suggesting a possible tightening to come, but without mentioning a figure, he said it might take some time for the rate to return to a “neutral level” given the uncertainty over the economic recovery.
The IMF last week said a more neutral rate for South Korea would be about 4 percent. It called for a “carefully calibrated” exit from supportive policies.
Meanwhile in Washington, the US Federal Reserve warned on Wednesday that the US economic recovery is showing “widespread” signs of slowing. The central bank said it saw “continued growth in national economic activity” between mid-July and the end of last month, “but with widespread signs of a deceleration.”
The latest Beige Book report, an economic survey which will guide a Sept. 21 policy meeting, painted a dour picture of the health of the economy, with an uneven recovery across the US and across sectors.
The picture from the real estate market showed how deep the crisis remains, with private demand struggling to keep pace after a government tax break was removed.
“Activity in residential real estate markets declined further,” the Fed reported.
“Home sales slowed further following an initial drop after the expiration of the homebuyer tax credit at the end of June, prompting a slowdown in construction activity as well,” the report said.
However, there was some good news from the manufacturing sector and the slightest of signs that Americans might be returning to the shops.
“Consumer spending appeared to increase on balance, despite continued consumer caution,” the report said.
The beige book report will be used at the next meeting of the central bank’s interest rate-setting body, the Federal Open Market Committee, on Sept. 21.
The Fed has set its base rate at a range of zero to 0.25 percent, a policy adopted since December 2008 in a effort to spark growth in the US economy.
Super Typhoon Kong-rey is the largest cyclone to impact Taiwan in 27 years, the Central Weather Administration (CWA) said today. Kong-rey’s radius of maximum wind (RMW) — the distance between the center of a cyclone and its band of strongest winds — has expanded to 320km, CWA forecaster Chang Chun-yao (張竣堯) said. The last time a typhoon of comparable strength with an RMW larger than 300km made landfall in Taiwan was Typhoon Herb in 1996, he said. Herb made landfall between Keelung and Suao (蘇澳) in Yilan County with an RMW of 350km, Chang said. The weather station in Alishan (阿里山) recorded 1.09m of
STORM’S PATH: Kong-Rey could be the first typhoon to make landfall in Taiwan in November since Gilda in 1967. Taitung-Green Island ferry services have been halted Tropical Storm Kong-rey is forecast to strengthen into a typhoon early today and could make landfall in Taitung County between late Thursday and early Friday, the Central Weather Administration (CWA) said yesterday. As of 2pm yesterday, Kong-Rey was 1,030km east-southeast of Oluanpi (鵝鑾鼻), the nation’s southernmost point, and was moving west at 7kph. The tropical storm was packing maximum sustained winds of 101kph, with gusts of up to 126 kph, CWA data showed. After landing in Taitung, the eye of the storm is forecast to move into the Taiwan Strait through central Taiwan on Friday morning, the agency said. With the storm moving
NO WORK, CLASS: President William Lai urged people in the eastern, southern and northern parts of the country to be on alert, with Typhoon Kong-rey approaching Typhoon Kong-rey is expected to make landfall on Taiwan’s east coast today, with work and classes canceled nationwide. Packing gusts of nearly 300kph, the storm yesterday intensified into a typhoon and was expected to gain even more strength before hitting Taitung County, the US Navy’s Joint Typhoon Warning Center said. The storm is forecast to cross Taiwan’s south, enter the Taiwan Strait and head toward China, the Central Weather Administration (CWA) said. The CWA labeled the storm a “strong typhoon,” the most powerful on its scale. Up to 1.2m of rainfall was expected in mountainous areas of eastern Taiwan and destructive winds are likely
The Central Weather Administration (CWA) yesterday at 5:30pm issued a sea warning for Typhoon Kong-rey as the storm drew closer to the east coast. As of 8pm yesterday, the storm was 670km southeast of Oluanpi (鵝鑾鼻) and traveling northwest at 12kph to 16kph. It was packing maximum sustained winds of 162kph and gusts of up to 198kph, the CWA said. A land warning might be issued this morning for the storm, which is expected to have the strongest impact on Taiwan from tonight to early Friday morning, the agency said. Orchid Island (Lanyu, 蘭嶼) and Green Island (綠島) canceled classes and work