South Korean Central Bank Keeps Base Rate Unchanged
South Korea’s central bank left its interest rate unchanged for a sixth straight monetary policy meeting, amid fragile job market and weak inflation. The Bank of Korea has kept its seven-day repurchase rate at 1.50%, as it was expected.
The South Korean economy created only 5.000 jobs in July from a year earlier (the smallest annual gain since January 2010), while average disposable household incomes declined in annual terms over the second quarter. South Korea has drafted a decade-high expansion in fiscal spending for next year, allocating 470.5 trillion won ($424.21 billion), to creating jobs and shoring up growth.
Lee Ju-yeol (Bank of Korea Governor) said external risks were on the rise but that the economy was still on track to meet the central bank’s growth forecasts. Lee noted upside and downside risks to growth, while saying inflation is still expected to rise toward the BOK’s 2% goal later this year. Headline inflation rate in South Korea has stayed below the bank's target of 2% since October 2017.
The South Korean won fell by 0.5% against the US dollar after the decision of central bank. The yield on 3-year government bonds fell 3 basis points to 1.95%, while the 10-year yield declined 2 basis points to 2.35%.