South Korea's central bank trimmed its 2019 growth forecast to a seven-year low while keeping its policy rate unchanged on Thursday, reinforcing expectations it could stand pat for some time amid conflicting risks to the economy.
The Bank of Korea now sees the economy growing 2.6 percent this year — the lowest since 2012 and slightly below its earlier projection of 2.7 percent — as slowing global growth threatens to put the brakes on the country's stellar export performance.
Asia's fourth-largest economy grew 2.7 percent in 2018 underpinned largely by government spending, but growth marked a six-year low as China's slowdown and the U.S.-China trade war threatened to dent global growth and demand for South Korea's exports.
In spite of rising economic headwinds, Governor Lee Ju-yeol has repeatedly emphasized that it is too early to discuss interest rate cuts as a significant downturn in the economy is still an unlikely scenario.
"It is a fact that there are risks of growth slowing down with weakening global growth. For now, a significant downturn in (South Korean) recovery is unlikely though," Lee told a news conference after leaving the base rate unchanged at 1.75 percent on Thursday.
The Korean won and shares barely reacted to the policy announcement.
A Reuters poll of 11 economists had expected the central bank to keep policy unchanged after it raised rates in November for the first time in a year. The moved was aimed mainly at containing a boom in parts of the country's property market.
"We're unlikely to see any changes in monetary policy this year unless the economy comes under external shocks from abroad," said Kim Sang-hun, an analyst at KB Securities.
"Lee himself made it clear that it's not the right time to discuss interest rate cuts just yet."