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South Korea's key consumer sentiment index hit its highest in nearly seven years, central bank data showed on Monday, raising further questions about how long the government's accommodative policy would be maintained.
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CNBC.com |
"It's not time to implement an exit strategy as nobody is sure if the private sector is improving yet. But with the positive economic data and forecasts, talk on a possible policy shift will Keep going," said Hwang Tae-yeon, a fixed-income analyst at Tong Yang Securities.
The Bank of Korea said in a statement its consumer sentiment index -- which measures sentiment in six categories -- hit 109 in July, up from 106 in June and the highest since touching 114 in the third quarter of 2002. The index had been compiled on a quarterly basis until the second quarter of 2008.
A reading above 100 indicates that most consumers are optimistic about economic conditions and their standard of living for the coming months.
Morgan Stanley also upgraded on Sunday its forecasts for South Korea's GDP growth in 2009 to -0.5 percent from -1.8 percent and to 5.0 percent from 3.8 percent in 2010.
That compares with a forecast for a 1.6 percent contraction this year from the central bank and 1.5 percent decline forecast by the finance ministry.
The sentiment data and forecasts lifted Seoul shares and helped the won extend gains.
President Lee Myung-bak and Finance Minister Yoon Jeung-hyun said it was premature to prepare for an exit from the government's easing policy, pledging authorities would maintain it to support a nascent recovery.
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The Bank of Korea held its policy interest rate steady this month at a record low of 2.0 percent, for the fifth month in a row. The central bank next reviews the base rate, which applies to its 7-day repurchase agreements, on August 11.
Data is a real-time snapshot *Data is delayed at least 15 minutes