South Korea’s central bank has held its policy rate steady for a fourth consecutive time amid signs that inflation is easing and growth is weakening.
The Bank of Korea kept the benchmark seven-day repurchase rate unchanged at 3.50% on Thursday as widely expected, continuing a pause in its rate-increase campaign aimed at fighting inflation.
All 22 economists surveyed by The Wall Street Journal ahead of the BOK’s decision had forecast no rate change in July, with four of them penciling in a possible rate cut by the end of 2023 to help boost growth. A majority of them still forecast no rate move throughout this year.
The bank has maintained the current rate, set in January after years of policy tightening, since it stood pat in February. The BOK has since been increasingly viewed as preparing a policy pivot to support growth, though it has repeatedly cautioned against lowering rates any time soon.
South Korea’s economy is losing steam, with inflation slowing to a 21-month low of 2.7% in June. Exports — the country’s key growth engine — fell on year for the ninth straight month in June.
Both the BOK and the government now expect the country’s gross domestic product to grow 1.4% in 2023, slower than their earlier estimate of 1.6%.