BoK Wary Of Coronavirus Resurgence

SOUTH KOREA: The Bank of Korea remains on watch for a resurgence of Covid-19 infections, despite the South Korean government easing some restriction in recent weeks, standing ready to add additional easing measures at a future point if needed, particularly if the labour market weakens further.

• However, this Thursday the BOK looks likely to stand pat on interest rates, leaving them unchanged at a record low 0.5%, a level it has been at since May 2020.
• There is some speculation that the BOK will expand unconventional measures in future to lower long-term interest rates, although some board members continue to be concerned about financial imbalances, including the rise in real estate prices.
• BOK officials are watchful for labour market conditions as the service sector remains in a severe condition as social distancing restrictions remain in place. The unemployment rate rose to 5.4% in January, the highest level since 1999, and the number of people employed fell at the sharpest pace in more than two decades as the virus continued to impact the job market.