MNI POLICY: BOK Base Rate Unch at 1.25%; Next meeting Jan 17

     TOKYO (MNI) - The Monetary Policy Board of the Bank of Korea on Friday left

the Base Rate unchanged at 1.25% after rate cuts in July and October, a policy

statement said.

     The next policy meeting is scheduled on Jan. 17, 2020.

     The BOK will likely maintain its easing bias at that January meeting as the

economy remains weak and inflation low amid the sustained slowdown in overseas

economies caused by trade frictions. 

     It remains uncertain, however, if the BOK will cut its policy rate at the

next meeting in January as the bank continues to monitor the impact of previous

cuts on the economy and awaits a resolution to the trade issues. 

     One positive sign is that adjustments of IT-related goods seem to have

bottomed and global demand is gradually recovering. 

     This will nevertheless take some time to flow through to South Korean

exports. 

     Today's Monetary Policy Board statement said: "Based on currently available

information the Board considers that the pace of global economic growth has

continued to slow as trade has contracted. The global financial markets have

been stable in general, as risk aversion has subsided in line mainly with

progress in the US-China trade negotiations."

     The BOK statement said, "Looking ahead, the Board sees global economic

growth and the global financial markets as likely to be affected by factors such

as the degree of the spread of trade protectionism, the changes in the monetary

policies of major countries, and geopolitical risks.

     "Looking ahead, the Board will conduct monetary policy so as to ensure that

the recovery of economic growth continues and consumer price inflation can be

stabilized at the target level over a medium-term horizon, while paying

attention to financial stability. As it is expected that domestic economic

growth will be moderate and it is forecast that inflationary pressures on the

demand side will remain at a low level, the Board will maintain its

accommodative monetary policy stance. In this process it will judge whether to

adjust the degree of monetary policy accommodation, while carefully monitoring

developments in the US-China trade negotiations, the economies and monetary

policies of major countries, the trend of increase in household debt, and

geopolitical risks and examining their effects on domestic macroeconomic and

financial stability conditions," the statement said.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com

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