Money in Korea
Korea - Money
BOK keeps rates at all-time low in October
At its meeting on 14 October, 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 weak activity and a deteriorating labor market. A resurgence of Covid-19 cases globally and the tightening of measures to contain the rise in infections are prompting uncertainty over a recovery in the short term, therefore the BOK decided to maintain its current accommodative policy stance in a bid to counter these setbacks. However, concerns over rising house prices and household debt likely discouraged the Bank from further easing.
Looking forward, the Bank confirmed in its statement that it will “maintain its accommodative monetary policy stance”, assuring it will watch economic developments closely amid the ongoing coronavirus outbreak. Most of our panelists see rates unchanged next year.
Commenting on the outlook, analysts at Nomura noted:
“We believe that monetary policy is likely to remain unchanged for some time for two reasons. First, there is less pressure on the BOK to support the economic recovery, following the announcements of stimulus packages. […] Second, monetary policy is constrained by the effective lower bound and we believe it will take some time for the BOK to design a new policy strategy.”
The next monetary policy meeting is set for 26 November.
FocusEconomics Consensus Forecast panelists see the base rate ending 2020 at 0.50% and 2021 at 0.54%.
Korea - Money Data
|Money (annual variation in %)||8.2||7.1||5.1||6.7||7.9|
5 years of economic forecasts for more than 30 economic indicators.
Korea Money Chart
Source: Bank of Korea and FocusEconomics calculations.
|Bond Yield||1.68||1.55 %||Dec 31|
|Exchange Rate||1,156||0.21 %||Dec 31|
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October 14, 2020
At its meeting on 14 October, 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 weak activity and a deteriorating labor market.
October 6, 2020
Consumer prices increased 0.66% in September over the previous month, slightly up from the 0.61% increase recorded in August.
October 5, 2020
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) rose to 49.8 in September from August’s 48.5, bordering the 50-threshold that separates an improvement from a deterioration in the manufacturing sector over the previous month. The print came as output grew for the first time in seven months.
October 1, 2020
Merchandise exports rose 7.7% in annual terms in September, rebounding from August’s 10.1% decline, amid an increasing demand for IT products due to the pandemic boosting home working.
September 29, 2020
Business confidence in the manufacturing sector was unchanged at September's 68.0 in October.