Interest Rate in Korea
Korea - Interest Rate
BOK keeps rates at all-time low in January
At its meeting on 15 January, the Bank of Korea (BOK) kept the base rate at its record low of 0.50%, in line with market expectations.
The Bank’s decision to hold came amid a rise in Covid-19 cases which is supressing activity at home. Meanwhile, inflation remained muted in recent months, and the impact of the current global resurgence in coronavirus cases is also likely to have influenced the decision. Meanwhile, concerns over debt levels and surging property prices likely discouraged the Bank from providing further monetary easing.
In its press release, the BOK stated it would maintain its accommodative policy on expectations of a modest recovery and downbeat, below-target inflation. However, due to concerns over financial stability there is likely little room for further rate cuts, with a strong majority of our panel seeing the BOK keeping rates unchanged until the end of this year. That said, further easing could be carried out through other channels, such as a bond purchasing program.
On the subject, analysts at Nomura commented:
“We believe that, given the domestic economic slump from the winter outbreak and the political landscape, the BOK will likely announce a regular bond-buying programme in Q1 to coordinate with the government’s expansionary fiscal policy.”
The next monetary policy meeting will be held on 25 February.
FocusEconomics Consensus Forecast panelists see the base rate ending 2021 at 0.51% and 2022 at 0.72%.
Korea - Interest Rate Data
|Policy Interest Rate (%)||1.50||1.25||1.50||1.75||1.25|
5 years of economic forecasts for more than 30 economic indicators.
Korea Interest Rate Chart
Source: Bank of Korea.
|Bond Yield||1.68||1.55 %||Dec 31|
|Exchange Rate||1,156||0.21 %||Dec 31|
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January 15, 2021
At its meeting on 15 January, the Bank of Korea (BOK) kept the base rate at its record low of 0.50%, in line with market expectations. The Bank’s decision to hold came amid a rise in Covid-19 cases which is supressing activity at home.
January 4, 2021
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) remained unchanged at November’s 52.9 in December, remaining above the 50-threshold that separates an improvement from a deterioration in the manufacturing sector over the previous month. The reading was led by slightly slower, but still solid, rises in output and new orders, supported by improved demand for vehicles and the recovery in external demand driven by trading partners such as Japan and China.
January 1, 2021
Merchandise exports shot up 12.6% over the same month last year in December amid solid IT demand, following November’s 4.1% increase.
December 31, 2020
Consumer prices rose 0.16% from the previous month in December, swinging from the 0.10% fall logged in November.
December 30, 2020
Industrial production increased 0.5% in November in annual terms (October: -2.0% yoy).