South Korea's central bank kept its policy rate unchanged on Thursday, as widely expected, as its export-reliant economy confronts softer global demand and trade war uncertainties.
The Bank of Korea's Monetary Policy Board voted to hold the benchmark interest rate at 1.75 percent, a bank official announced without elaborating. It last raised the rate by 25 basis points in November 2018.
All but one of 17 economists surveyed by Reuters expected the central bank to hold the seven-day repurchase rate, while a slim majority of nine forecast a rate cut between now and 2021.
Markets largely shrugged off the decision, looking ahead to the central bank's quarterly outlook review at 0430 GMT where the BOK may downgrade its growth and inflation forecasts.
Expectations of a rate cut have gathered momentum in the past month as the U.S. Federal Reserve last month signaled an end to its tightening cycle.
Weaker growth amid sluggish exports and a stagnant property market have allowed the BOK to contemplate stimulus again, which would mark a U-turn from its tightening cycle that began at the end of 2017, economists say.
"As the Fed is expected to ease policies in 2020 to counter slowing growth, the BOK too is likely to act accordingly. Having said that, a cut may not come as imminent as this year, given policymakers' concerns about re-igniting the property market boom," said Oh Suk-tae, an economist at Societe Generale and among those who expect a rate cut between now and 2021.
Rising household debt remains an issue for the central bank, as previous interest rate cuts have been blamed for fueling the housing market boom.
The BOK currently sees this year's economic growth at 2.6 percent, the weakest in seven years, as exports suffered its fourth straight contraction through March this year on cooling demand.
South Korea's headline inflation slowing to its weakest pace since July 2016 in March has also added pressure on policymakers to shift to an easing stance and ramp up stimulus.
Central bank governor Lee Ju-yeol has said it is in no hurry to easy policy, contrary to bond market pricing, which implies a chance its next move could be a cut.
The nation's three-year bond yields were trading at 1.775 percent early on Thursday, still hovering near the central bank's policy rate of 1.75 percent and close to levels at which the BOK has in the past been prompted to cut rates.
It fell as low as 1.675 percent in the last week of March as traders raised their bets the BOK was poised to cut interest rates for the first time in three years.