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S. Korea central bank to decide on key rates next week

S. Korea central bank to decide on key rates next week

SEOUL: South Korea’s central bank will decide on the country’s key rates next week as data on exports, consumer and corporate sector sentiments and various other economic indicators are released, market watchers said Saturday.

The last Monetary Policy Committee meeting under current Bank of Korea (BOK) governor Lee Ju-yeol will be held on Tuesday, with most analysts here expecting the rates to remain fixed at 1.5 percent, unchanged from the previous month.

Since marking up rates by 0.25 percentage point in November, local economists said domestic conditions, on their own, do not warrant another rate hike.

“The pace of economic growth for the export driven economy is not as strong as originally anticipated, and there is not too much inflationary pressure,” an analyst said.

He said, however, that with the U.S. Federal Reserve likely to mark up rates at a faster than anticipated pace this year, external developments could pressure the BOK to follow suit.

Initially, the Fed hinted that it would adjust rates three times in 2018, but this may increase to four amid strong signs of economic growth.

If the world’s largest economy raises its policy rates as anticipated in March, South Korea’s rates will actually be lower than the 1.50-1.75 percent forecast for the U.S. Experts warned this may lead to an outflow of capital and greater volatility in the financial sector.

In related news, the central bank will release the country’s consumer sentiment index and business survey index early next week. Both are indicators of future economic trends.

In addition, the country’s statistical office will release its birthrate numbers for 2017, with most data checked so far showing the number of newborns born in during the year failing to reach the 400,000 mark for the first time in the country’s history.

The trade ministry, meanwhile, will disclose export and import figures for February on Thursday.