Central Banks

Bank of Korea holds rates steady in October

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South Korea's central bank kept its policy interest rate unchanged for a fourth straight month on Thursday, a widely expected decision as it aims to assess the recent signs of recovering domestic demand.

The Bank of Korea's monetary policy committee left its base rate unchanged at a record-low 1.50 percent, a media official said without elaborating. Governor Lee Ju-yeol is due to hold a news conference later today.

All but three out of the 29 analysts surveyed by Reuters had correctly forecast Thursday's on-hold stance, while the three saw a cut. Fourteen of the 29 analysts in the same poll, including the three who expected an easing this week, predicted another 25-basis-point cut as soon as November.

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Krystal Tan, an economist at Capital Economics, said that she expected the BOK to keep rates on hold for the rest of 2015 and through 2016.

"As recent economic data have been encouraging, the pressure on the BoK to further loosen monetary policy has eased," Tan said.

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"Consumer confidence and business sentiment have both edged up in recent months. Industrial production and retail sales have also recorded gains. Exports remain a weak spot but, even there, some signs of improvement have emerged."

"Another key reason why we do not expect further rate cuts is concern about Korea's high and rising household debt."