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Moody's Analytics expects BOK to hold policy rate steady

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Staff Writer | October 14, 2017
Bank of Korea
Asia   The Bank of Korea

South Korea's central bank is likely to hold its key rate steady this month as soft domestic demand could keep monetary policy accommodative in the near term, Moody's Analytics said.

The Bank of Korea (BOK) is set to hold its rate review session Thursday to decide whether to keep or adjust the all-time low rate of 1.25 percent.

Still, Moody's Analytics said in a report that the South Korean government's stimulus measures such as the proposed 7.1 percent on-year spending increase in the 2018 budget and concerns about record high household debt "could prompt a faster than expected rate hike cycle next year."

South Korea's overall household debt came to 1,388.3 trillion won ($1.22 trillion) as of end-June, up 10.4 percent from a year earlier, according to data compiled by the BOK.

In June, BOK Gov. Lee Ju-yeol said the central bank may take a monetary tightening approach if the economy shows signs of a robust recovery.

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