South Korea’s central bank kept its key interest rate unchanged at 2.75 percent following a 25 basis points cut the previous month.
The freeze by the Bank of Korea had been widely expected as the reduction in October needs more time to produce results.
South Korea’s economy grew 0.2 percent in the third quarter to September from the previous three months — the slowest pace in nearly three years as the eurozone crisis impacted on investment activity.
The inflation rate accelerated to 2.1 percent in October but remained comfortably within the central bank’s 2.0-4.0 percent target range.
Factory output and exports improved marginally despite other aspects of the economy remaining sluggish, including consumption.
Industrial output showed a slight expansion in September from a month before, ending a three-month run of contractions.
Exports, which account for about 50 percent of the economy, grew 1.2 percent on-year in October, the first gain in four months.
Some analysts said the central bank might resume the easing cycle in the first half of next year as the global recovery remains on a precarious footing.
“(The central bank) is now concerned about the weakening long-term growth trend. It will be inclined to counter it with additional monetary easing early next year,” said Samsung Securities analyst Ryan Oh.
– Dow Jones Newswires contributed to this report –
S.Korea keeps interest rate unchanged at 2.75%
