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TOKYO (MNI) - The Bank of Korea left rates unchanged at 1.25%, despite
growing downside risks from the coronavirus outbreak, saying it will continue
monitoring the impact of previous rate cuts and the impact of China's disrupted
supply chains on domestic production.
However, the BOK had room to ease policy further if needed, although it
wanted a greater assessment of the virus impact, BOK Governor Lee Ju-yeol said
following the announcement.
Policymakers said the will continue to eye the side-effects of low interest
rates, including the increase in household borrowing.
"The Board sees global economic growth and the global financial markets as
likely to be greatly affected by the severity of the COVID-19 outbreak and
developments in global trade protectionism and geopolitical risks," a statement
accompanying the announcement said.
Looking ahead, the BOK 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," the statement added.
The decision came amid speculation that the BOK may lower the policy rate
to prevent sentiment worsening as downside risks build.
The BOK saw domestic growth weaker on the back of the virus, although it
did see some pick-up in capex spending.
The next policy meeting is scheduled for April 9, just ahead of National
The BOK cut its base rate to 1.25% in October, 2019, matching the
historical low seen between September 2016 to October 2017 and has been
reluctant to further lower the benchmark to a fresh all-time low.
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