* S Korea Base Rate unchanged at 0.75%, as expected
* Governor Lee’s news conference begins at 0220 GMT
* Most analysts see the base rate at 1.25% by the end of 2022
SEOUL, Oct 12 (Businesshala) – South Korea’s central bank kept interest rates unchanged on Tuesday, taking relief in August after its first rate hike in nearly three years, a short-term outlook even as a resurgence in COVID-19 cases But the clouds covered.
The Bank of Korea (BOK) kept the benchmark interest rate unchanged at 0.75%, as expected by 29 out of 31 analysts surveyed by Businesshala.
BOK is seeking to keep the economic recovery on track, while trying to contain a surge in private sector credit, a red-hot property market and above-targeted inflation.
Asia’s fourth-largest economy grew a revised 6.0% in the second quarter from a COVID-induced slowdown a year ago, the fastest annual expansion in a decade thanks to strong exports of chips and petrochemical products.
But the recent spike in daily COVID-19 cases, which reached over 3,000 in a few days, has clouded the outlook for the months to come.
Most analysts in a Businesshala poll had expected BoK to hike rates in November and then raise them by 25 bps, bringing the rate to 1.25% by the end of 2022.
Annual consumer inflation reached 2.5% in September, staying above the central bank’s 2% target for the sixth consecutive month.
“BOK has made it clear that its main priority is to contain financial risks amid rising home prices and household debt,” said Alex Holmes, an economist at Capital Economics.
All eyes are now on Governor Lee Joo-yol’s news conference at 0220 GMT, where the bank is “likely to give strong indications that it intends to increase in November. Further increases are likely next year as well,” Holmes said. said.
In August BOK became the first major Asian central bank to raise borrowing costs since the COVID-19 pandemic began, keeping it ahead of the curve as central banks around the world seek to dial back emergency stimulus.
The US Federal Reserve indicated it would begin reducing its bond-buying as early as November and the Bank of England said it could raise interest rates before the end of this year.
BOK’s rate meeting on Tuesday was attended for the first time by new board member Park Ki-young, who joined the seven-member board last week.