BOK keeps key rate unchanged for 13th straight session “household debt, US monetary policy direction to be watched”

[Korea Financial Times, Lee Sungkyu] The Bank of Korea has kept its key interest rate unchanged for the 13th consecutive time.

On the morning of the 22nd, the Monetary Policy Committee of the Bank of Korea held its August monetary policy meeting and kept the key interest rate at the current level of 3.50 percent.

Despite concerns about sluggish domestic demand, the Monetary Policy Committee said it needs to further examine the impact on financial stability, including the household debt problem and the direction of U.S. monetary policy.
The global economy continues to grow moderately. However, while uncertainties related to economic trends in major countries such as the U.S. have increased somewhat, inflation has continued to slow down. In this situation, global stock market volatility has increased due to concerns about a slowdown in the US economy and the liquidation of yen carry trade funds.

Although the preference for safe assets is noticeable when stock market volatility increases, the dollar weakened due to expectations for a cut in the U.S. benchmark interest rate. The Monetary Policy Committee predicted that the global economy and international financial markets will be affected by slowing inflation in major countries, monetary policy management, geopolitical risks and changes in the political situation in major countries in the future.

The domestic economy continued to show strong exports, but consumption recovered slower than expected. Employment is generally in good shape, with the number of employed continuing to increase. The Monetary Policy Committee predicted that the domestic economy will continue to grow slowly in the future as consumption recovers on the back of export growth.

This year, domestic economic growth is expected to be 2.4%, slightly lower than the previous forecast of 2.5%, reflecting the strong growth in the first quarter, which was driven by temporary factors. Next year, it maintained its forecast of 2.1% growth, the same as in the previous forecast.

Lee Sungkyu (lsk0603@fntimes.com)