MNI REVIEW: BOK Keeps Rate Unchanged; GDP Weaker Than May View

--Sees Some Pick-Up In Domestic Consumption, Exports Remain Weak

     TOKYO (MNI) - The Bank of Korea kept the Base Rate unchanged at an all-time

low 0.50% Thursday, as it noted the economy showing some domestic bright spots.

     The BOK in May lowered the policy rate to a new historical low of 0.50%

from 0.75%. The next policy-setting meeting is scheduled for August 27.

     "The Board will continue to conduct monetary policy in order to support the

economy and stabilize consumer price inflation at the target level over a

medium-term horizon, while paying attention to financial stability," the

statement released alongside the decision said.

     "As economic growth is expected to be sluggish and inflation pressures on

the demand-side are forecast to remain weak due to the Covid-19 pandemic, the

Board will maintain its accommodative monetary policy stance," it added.

     "In this process, it will thoroughly assess developments related to the

pandemic, the impact on the economy and financial markets here and abroad,

changes in financial stability, and the effects of the policy measures taken in

response to the pandemic," it also said.

     --OUTLOOK

     As for economic climate, the BOK said the economy remain sluggish with

overall exports still falling  

     "Although consumption has rebounded with the relaxation of some

pandemic-related restrictions on economic activity and the government's stimulus

package, exports have continued to decline," the bank said.

     "GDP growth this year is likely to be lower than the May forecast of

-0.2%," it said.

     The International Monetary Fund in June revised down its forecast for South

Korea economic growth to -2.1% from -1.2% in April.

--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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