{"id":2206243,"date":"2024-08-23T08:00:01","date_gmt":"2024-08-22T23:00:01","guid":{"rendered":"https:\/\/koreapro.org\/?p=2206243"},"modified":"2024-08-22T13:29:35","modified_gmt":"2024-08-22T04:29:35","slug":"south-koreas-central-bank-holds-rates-steady-for-13th-consecutive-time","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2024\/08\/south-koreas-central-bank-holds-rates-steady-for-13th-consecutive-time\/","title":{"rendered":"South Korea\u2019s central bank holds rates steady for 13th consecutive time"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">The Bank of Korea (BOK) kept its key interest rate <\/span><a href=\"https:\/\/www.bok.or.kr\/portal\/bbs\/P0000559\/view.do?nttId=10086571&amp;searchCnd=1&amp;searchKwd=&amp;depth2=200038&amp;depth3=201263&amp;depth=201263&amp;pageUnit=10&amp;pageIndex=1&amp;programType=newsData&amp;menuNo=200690&amp;oldMenuNo=201263\"><span style=\"font-weight: 400;\">unchanged at 3.5%<\/span><\/a><span style=\"font-weight: 400;\"> for the 13th consecutive time on Thursday, citing persistent household debt and moderating inflation. The decision follows a series of rate hikes from April 2022 to Jan. 2023. The central bank also lowered its 2024 growth forecast to 2.4% from 2.5%, reflecting weaker domestic demand despite robust exports.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Household debt in South Korea continues to climb, with outstanding credit reaching a record $1.42 trillion (1,896.2 trillion won) in the second quarter of 2024. Inflation rose to <\/span><a href=\"https:\/\/www.bok.or.kr\/portal\/bbs\/B0000501\/view.do?nttId=10086529&amp;searchCnd=1&amp;searchKwd=&amp;depth2=200038&amp;depth3=201263&amp;depth=201263&amp;pageUnit=10&amp;pageIndex=1&amp;programType=newsData&amp;menuNo=201264&amp;oldMenuNo=201263\"><span style=\"font-weight: 400;\">2.6% in July<\/span><\/a><span style=\"font-weight: 400;\">, remaining below 3% for the fourth month. The BOK\u2019s rate freeze aligns with the U.S. Federal Reserve\u2019s July 31 decision to <\/span><a href=\"https:\/\/www.federalreserve.gov\/newsevents\/pressreleases\/monetary20240731a.htm\"><span style=\"font-weight: 400;\">hold rates steady<\/span><\/a><span style=\"font-weight: 400;\">, indicating cautious monetary policy amid uncertain economic conditions.<\/span><\/p>\n<p><b>WHY IT MATTERS<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The BOK\u2019s decision to maintain its key interest rate at 3.5% signals its focus on mitigating financial risks amid record household debt. Despite inflation stabilizing at 2.6% in July, the central bank is wary of cutting rates prematurely due to the potential for increased <\/span><a href=\"https:\/\/www.bok.or.kr\/cdnFileSrc\/portal\/8e82aa2ac834435c98d23b1f036836d1\/1\/filedown.pdf\"><span style=\"font-weight: 400;\">capital outflows<\/span><\/a><span style=\"font-weight: 400;\"> and further <\/span><a href=\"https:\/\/koreapro.org\/2024\/06\/south-korea-japan-agree-to-boost-ties-amid-global-challenges-at-finance-talks\/\"><span style=\"font-weight: 400;\">currency depreciation<\/span><\/a><span style=\"font-weight: 400;\">. These risks are heightened by the Bank of Japan\u2019s July 31 decision to <\/span><a href=\"https:\/\/koreapro.org\/2024\/08\/south-korea-braces-for-economic-turbulence-following-japans-interest-rate-hike\/\"><span style=\"font-weight: 400;\">raise interest rates<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A rate cut before the U.S. Federal Reserve\u2019s <\/span><a href=\"https:\/\/www.reuters.com\/markets\/us\/fed-minutes-show-depth-debate-over-july-rate-cut-2024-08-21\/\"><span style=\"font-weight: 400;\">expected decision<\/span><\/a><span style=\"font-weight: 400;\"> in September, which would widen the interest rate differential between South Korea and the U.S., would likely exacerbate downward pressure on the won. This would lead to higher import costs, particularly in essential goods and raw materials, reigniting inflationary pressures just as the BOK is starting to bring them under control.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, maintaining the current rate may further strain <\/span><a href=\"https:\/\/koreapro.org\/2024\/08\/bank-of-korea-faces-policy-dilemma-amid-global-economic-uncertainties\/\"><span style=\"font-weight: 400;\">domestic consumption<\/span><\/a><span style=\"font-weight: 400;\">, which could slow economic growth. The BOK has already revised economic growth downward to 2.4% for 2024. South Korea\u2019s exports have been robust, with outbound shipments reaching <\/span><a href=\"https:\/\/www.customs.go.kr\/kcs\/na\/ntt\/selectNttInfo.do?mi=2891&amp;bbsId=1362&amp;nttSn=10118294&amp;nttSnUrl=4c665bc2a1158712cb32f1ebdd974c59\"><span style=\"font-weight: 400;\">over $33.1 billion<\/span><\/a><span style=\"font-weight: 400;\"> so far this month, but they may not be sufficient to buoy growth figures.<\/span><\/p>\n<div class=\"content-tags\"><a href=\"https:\/\/koreapro.org\/tag\/business-economy\/\"><span class=\"tag\">Business &amp; Economy<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"<p>The Bank of Korea (BOK) kept its key interest rate unchanged at 3.5% for the 13th consecutive time on Thursday, citing persistent household debt and moderating inflation. The decision follows a series of rate hikes from April 2022 to Jan. 2023. The central bank also lowered its 2024 growth forecast to 2.4% from 2.5%, reflecting [&hellip;]<\/p>\n","protected":false},"author":10407,"featured_media":2206006,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[24],"class_list":["post-2206243","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-briefings","tag-business-economy"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>South Korea\u2019s central bank holds rates steady for 13th consecutive time - KOREA PRO<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/koreapro.org\/2024\/08\/south-koreas-central-bank-holds-rates-steady-for-13th-consecutive-time\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"South Korea\u2019s central bank holds rates steady for 13th consecutive time - KOREA PRO\" \/>\n<meta property=\"og:description\" content=\"The Bank of Korea (BOK) kept its key interest rate unchanged at 3.5% for the 13th consecutive time on Thursday, citing persistent household debt and moderating inflation. 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