Interest Rate in Korea
Korea - Interest Rate
Bank of Korea holds interest rates steady in January
At its 24 January monetary policy meeting, the Bank of Korea adopted a wait-and-see approach and held the base rate steady at 1.75%, as expected by market analysts. This follows a 0.25 percentage-point hike at its last monetary policy meeting on 30 November, which was driven by high household debt growth and rising interest rates in major global economies such as the United States.
The decision was preceded by the release of GDP data on 23 January, which showed annual economic growth in the fourth quarter accelerating on the back of government stimulus spending. The Bank of Korea noted that inflation is likely to remain suppressed through 2019, after it slowed to 1.3% in December from 2.0% in November, partly due to lower oil prices and a fuel tax cut, and after core inflation moderated to 1.1% from 1.2%. The Bank consequently lowered its inflation forecast for 2019 to 1.4% from 1.7%. The year’s respective economic growth forecast was also trimmed to 2.6% from 2.7%. The above suggests the Bank of Korea is slightly less likely to pursue a more hawkish monetary policy in the short-term; guarding against speculation of a more accommodative approach, Governor Lee emphasized that the current policy is already accommodative, and that it is not the right time for a rate cut.
Looking ahead, the Bank of Korea gave little away about its future monetary policy moves but affirmed that it would continue to be motivated by ensuring economic growth, achieving target inflation of 2.0% over the medium-term, and domestic financial stability. It also stated it would pay close attention to monetary policies in other key economies, especially in the United States; the increase in household debt; and geopolitical risks. The next monetary policy meeting is scheduled for 18 April.
Korea Interest Rate Forecast
Met the why particular Consensus Forecast panelists expect the base rate to rise and end 2019 at 1.85%. In 2020, our panelists see the policy rate ending the year at 1.9%.
Korea - Interest Rate Data
|Policy Interest Rate (%)||2.50||2.00||1.50||1.25||1.50|
5 years of economic forecasts for more than 30 economic indicators.
Korea Interest Rate Chart
Source: Bank of Korea.
|Bond Yield||1.99||1.55 %||Feb 14|
|Exchange Rate||1,125||0.21 %||Feb 14|
|Stock Market||2,226||-0.11 %||Feb 14|
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February 1, 2019
Merchandise exports fell 5.8% year-on-year in January—a more pronounced drop than December’s revised 1.3% fall (previously reported: -1.2% year-on-year)—to total USD 46.4 billion.
February 1, 2019
The manufacturing Purchasing Managers’ Index (PMI), produced by Nikkei and reported by IHS Markit, fell from 49.8 in December to 48.3 in January, which represents an over two-year low.
February 1, 2019
Consumer prices decreased 0.1% month-on-month in January, less than the 0.3% drop in December.
January 31, 2019
Industrial production in the mining, manufacturing, and gas and electricity sectors rose 1.6% in December compared to the same month a year earlier, up from the revised 1.1% increase in November (previously reported: +0.1%).
January 30, 2019
For February, the Bank of Korea’s forward-looking business confidence indicator (BSI) for manufacturers fell to 65 from the 71 for January, leaving it below the crucial 110-point threshold separating pessimism from optimism, where it has been since June 2011.