Bank Of Korea Keeps Rates At 2%

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The Bank of Korea on Thursday decided to maintain interest rates on hold for the 10th consecutive month, maintaining the record low of 2.00 percent - in line with expectations.

Most analysts expected the bank to maintain the status quo, although a few felt that the bank might put forth a 25 basis point hike - signaling that the global economic slowdown is indeed over.

"Domestic economic activity has continued on a recovering trend thanks to the progress of global economic situation," the bank said in a statement. "Exports and consumption have continued to improve. There still, however, remains uncertainty as to the economic growth path."

The bank had trimmed rates by 50 basis points to 2 percent on February 12, marking the sixth rate cut in the previous four months.

The BoK had pared rates by 25 basis points on October 9 and then slashed them again by 75 basis points in an emergency meeting on October 27. Then on December 11, the bank slashed rates by another 100 basis points in the largest rate cut in the bank's history - since it started adopting a benchmark interest rate in 1999. On January 9, the bank trimmed rates by 50 basis points to 2.50 percent.

"Domestic economic activity has continued on a recovering trend thanks to the progress of global economic situation," the bank said. "Exports and consumption have continued to improve. There still, however, remains uncertainty as to the economic growth path."

Before raising rates in August 2008 to combat inflation, the board had left interest rates at 5.00 percent for 11 straight meetings.

"Looking ahead, the committee will maintain the accommodative policy stance for the time being with an emphasis on sustaining the recovery of business activity," the bank said.

(Market News Provided by RTTNews)