Bank of Korea holds rates, to keep policy restrictive

SEOUL  -South Korea’s central bank held interest rates steady for a fourth straight meeting on Thursday, saying it will maintain a tight stance on monetary policy amid still high prices and heightened financial uncertainty.

The Bank of Korea (BOK) said its seven-member monetary policy board voted to keep the base rate unchanged at 3.5 percent, as it did in meetings in February, April and May.

“The Board will maintain a restrictive policy stance for a considerable time with an emphasis on ensuring price stability,” the BOK said in a statement.

It said core inflation for this year was seen slightly higher than its previous projection, while risks to some non-bank financial sectors have expanded.

The decision comes amid heightened worries about the country’s soft property market that have weighed on liquidity conditions of some 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.

READ: Bank of Korea holds fire again on rates, trims growth forecast

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 percent in July 2022. The rate stood at 2.7 percent in June this year, although it is still higher than the central bank’s medium-term target of 2 percent .

READ: South Korea consumer inflation hits 21-month low

South Korea’s import prices fell in annual terms for a fifth month in June and marked the steepest drop in more than eight years, central bank data showed earlier on Thursday.

Governor Rhee Chang-yong is due to hold a news conference soon.