South Korea's June Consumer Sentiment at 2-Year High

South Korea's key consumer sentiment index in June rose for a third consecutive month to a near two-year high despite repeated cautioning by policymakers on the state of the economy, central bank data showed on Thursday.

Korea, Korean Flag
Korea, Korean Flag

The Bank of Korea said in a statement its consumer sentiment index -- which measures sentiment in six categories -- hit 106 in June, up from 105 in May and the highest since touching 108 in the third quarter of 2007.

"Consumer sentiment has quickly improved as many people have been relieved from a fear of a deep recession and supported by aggressive fiscal and monetary policy," said Kim Seung-hyun, an economist at Taurus Investment & Securities.

"But it's hard to continue the big jump well into the third quarter as the recovery momentum will likely weaken amid lack of fresh stimulus," he said.

Separately, the land ministry said that the nation's land prices in May rose 0.11 percent from April, a second-monthly gain after falling for five consecutive months.

A reading above 100 indicates the most consumers are optimistic about economic conditions and their standard of living for the coming months.

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The Bank of Korea held its policy interest rate steady at a record low of 2.0 percent this month for the fourth month in a row as Asia's fourth-largest economy showed signs of recovery, which prompted investors to bet on an early rate increase.

But officials repeatedly called for caution, saying the economy was not in a full recovery yet and that a sudden policy shift could dampen improvement.

The central bank next reviews the base rate, which applies to its 7-day repurchase agreements, on July 9.