Bank of Korea stands pat for fourth straight meeting

By Jihoon Lee and Joyce Lee

SEOUL (Reuters) -South Korea’s central bank on Thursday held interest rates steady for a fourth straight meeting, as expected, faced with softening but still high inflation and heightened financial uncertainty.

The Bank of Korea (BOK) said its seven-member monetary policy board voted to keep the base rate unchanged at 3.50%, as it did in meetings in February, April and May.

Domestic markets showed muted reaction as the decision was in line with the unanimous forecasts of 46 economists surveyed by Reuters.

The BOK has kept monetary policy unchanged since its last interest rate hike in January and its tightening campaign, which began in August 2021, is widely expected to be over.

South Korea’s annual consumer inflation has eased since peaking at a 24-year high of 6.3% in July 2022. The rate stood at 2.7% in June this year, although it is still higher than the central bank’s medium-term target of 2%.

The decision comes amid heightened worries about a sluggish property market that has weighed on liquidity conditions of financial institutions.

South Korea’s heavily trade-reliant economy has been losing momentum this year due to a slowing global economy, weak chip sector and still sluggish demand from China, although consumer sentiment ticked up in June to its highest in just over a year.

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