SEOUL, Oct 22 : The Bank of Korea left its benchmark interest rate unchanged on Thursday, pausing after back-to-back quarter-point hikes in July and August, although strong chip-driven growth and above-target inflation keep the option of further tightening open.
The seven-member monetary policy board at the BOK voted to keep the seven-day repurchase rate at 3.00 per cent, a decision that was forecast by all 34 analysts surveyed by Reuters.
The July and August increases were the central bank’s first consecutive hikes in more than three years, after which Governor Shin Hyun Song said a gradual pace of tightening was preferred.
Shin however reiterated at an International Monetary Fund event on October 13 that policy will remain restrictive until inflation converges to its target.
“They stated they would monitor the impact of the back-to-back hikes, and given the recent rise in market volatility – particularly centered around the stock market – it will be difficult for a hawkish call to emerge,” Kang Seung-won, an analyst at NH Investment & Securities, said ahead of the meeting. “Simply taking a breather after consecutive hikes slows down the pace of tightening, which in turn will soften their hawkish intensity.”
He had expected no change to rates.
Headline consumer inflation slowed to 2.9 per cent in September from 3.1 per cent in August, remaining above the bank’s 2 per cent target.
Exports are powering ahead thanks to global spending on artificial intelligence. Shipments from January to September topped $800 billion for the first time ever.
With growth expected to remain firm and inflation above target, median forecasts in the survey showed the BOK raising its base rate to 3.25 per cent at its November meeting, in line with the BOK’s dot plot projection.
Shin will hold a news conference at 0210 GMT.
