Key Takeaways
- • The Bank of Korea held its benchmark seven-day repurchase rate unchanged at 3.00% on Thursday, pausing after quarter-point hikes in July and August, according to Reuters.
- • All 34 analysts surveyed by Reuters had forecast the hold, and the seven-member monetary policy board voted unanimously for the decision as reported.
- • Headline consumer inflation eased to 2.9% in September from 3.1% in August, still above the central bank's 2% target.
- • Median survey forecasts point to a hike to 3.25% at the November meeting, consistent with the bank's dot plot projection.
Summary
The Bank of Korea kept its benchmark interest rate unchanged at 3.00% on Thursday, pausing after two consecutive quarter-point increases in July and August, according to Reuters. The seven-member monetary policy board voted to hold the seven-day repurchase rate, a decision that all 34 analysts surveyed by Reuters had forecast. The July and August moves were the central bank's first consecutive hikes in more than three years.
Governor Shin Hyun Song has indicated a preference for a gradual pace of tightening. At an International Monetary Fund event on October 13, he reiterated that policy would remain restrictive until inflation converges to the target. Ahead of the meeting, Kang Seung-won, an analyst at NH Investment & Securities, said the board had signaled it would monitor the impact of the back-to-back hikes. He noted that recent stock market volatility would make a hawkish call difficult, and that a pause would slow the pace of tightening. He had expected no change to rates.
Headline consumer inflation slowed to 2.9% in September from 3.1% in August, remaining above the 2% target. Exports have been strong on global spending on artificial intelligence, with shipments from January to September exceeding $800 billion for the first time.
With growth expected to remain firm and inflation above target, median forecasts in the Reuters survey pointed to a increase in the base rate to 3.25% at the November meeting, in line with the bank's dot plot projection. Shin was scheduled to hold a news conference at 0210 GMT.
Governor Shin Hyun Song has indicated a preference for a gradual pace of tightening. At an International Monetary Fund event on October 13, he reiterated that policy would remain restrictive until inflation converges to the target. Ahead of the meeting, Kang Seung-won, an analyst at NH Investment & Securities, said the board had signaled it would monitor the impact of the back-to-back hikes. He noted that recent stock market volatility would make a hawkish call difficult, and that a pause would slow the pace of tightening. He had expected no change to rates.
Headline consumer inflation slowed to 2.9% in September from 3.1% in August, remaining above the 2% target. Exports have been strong on global spending on artificial intelligence, with shipments from January to September exceeding $800 billion for the first time.
With growth expected to remain firm and inflation above target, median forecasts in the Reuters survey pointed to a increase in the base rate to 3.25% at the November meeting, in line with the bank's dot plot projection. Shin was scheduled to hold a news conference at 0210 GMT.
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