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BOK Rate Hold: Why South Korea's Central Bank Pauses Amid Currency Woes

South Korea's central bank is widely expected to keep interest rates steady this week. Economists cite concerns about the weakening currency and strong apartment prices in Seoul as key factors. The Bank of Korea has maintained its current rate for three consecutive meetings through October. While the focus remains on financial stability, nearly half of surveyed experts anticipate rate cuts in the coming months.

Key Points: South Korea Central Bank Expected to Keep Interest Rate Unchanged

  • All 24 surveyed analysts unanimously predict BOK will maintain current 2.5% rate
  • Korean won hits weakest level since April at 1,475.6 per dollar
  • Central bank expected to revise upward growth forecasts for 2025
  • Nine economists anticipate 25-basis-point rate cut within three months
2 min read

BOK expected to keep interest rate unchanged this week: Poll

Bank of Korea likely to maintain 2.5% rate amid currency weakness and property market concerns, with economists divided on future cuts.

"Given that apartment prices in Seoul remain strong and the currency continues to weaken, it would be better for the BOK to keep the base rate unchanged - Park Jung-woo, Nomura Securities"

Seoul, Nov 24

The South Korean central bank is widely expected to hold its policy rate steady this week to ensure financial stability amid a weakening currency and an unsettled property market, a poll showed on Monday.

According to a survey conducted by Yonhap Infomax, the financial news arm of Yonhap News Agency, all 18 local analysts and experts polled predicted that the Bank of Korea (BOK) will keep its base rate unchanged at 2.5 percent at its rate-setting meeting scheduled for Thursday, reports Yonhap news agency.

A separate survey by Yonhap News Agency of six additional experts also found unanimous expectations for a rate freeze this month.

"Given that apartment prices in Seoul remain strong and the currency continues to weaken, it would be better for the BOK to keep the base rate unchanged," said Park Jung-woo, an economist at Nomura Securities.

The BOK's Monetary Policy Board held its key rate steady for three consecutive meetings through October, though it has emphasised the need to support the economic recovery through monetary easing. The central bank has been in an easing cycle, having last cut the key rate at its May meeting.

The Korean won has weakened markedly against the U.S. dollar amid heavy foreign stock selling and broad dollar strength. The currency closed at 1,475.6 won per dollar Friday, its weakest level since April.

"As the central bank is widely expected to revise up its growth forecasts for this year and next year, it is likely to focus on financial stability," said Choi Ji-uk, an economist at Korea Investment & Securities.

The BOK previously forecast economic growth of 0.9 percent for 2025 and 1.6 percent for next year, with its revised outlook set to be released Thursday.

Regarding the prospects for future rate cuts, nine of the 18 respondents in the Yonhap Infomax survey expected a 25-basis-point reduction within the next three months.

- IANS

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Reader Comments

R
Rohit P
At 2.5%, their interest rate is much lower than India's. Our RBI has been more conservative, which has helped control inflation better. Maybe South Korea should learn from our approach? 🤔
A
Arjun K
Currency weakness is a global issue affecting all emerging markets. Good that they're prioritizing financial stability over quick growth. That's the responsible approach for any central bank. 👍
S
Sarah B
As someone working in finance, I appreciate how transparent their policy approach seems. The unanimous expert predictions suggest good communication from their central bank. Wish all central banks were this predictable!
K
Karthik V
The property market concerns in Seoul remind me of our own real estate challenges in metro cities. Central banks worldwide are walking a tightrope between growth and stability. Tough job!
M
Michael C
While I understand the stability argument, keeping rates unchanged when half the experts expect cuts soon seems a bit too cautious. They might miss the opportunity to boost their economy at the right time.

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