MNI REVIEW: BOK Keeps Rate Unchanged at 1.25%; Can Act If Need

     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.

     --WEAKER GROWTH

     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

Assembly elections.

     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.

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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