BOK Keeps Interest Rates Unchanged
29 February, 2020
THE LENDER of Korea slashed its financial growth forecast for Korea to 2.1 percent this season, down 0.2 percentage point from its projection of 2.3 percent in November of 2019.
However the forecast was made on the assumption that the coronavirus outbreak will peak in March, and if it drags on the forecast could be slashed further.
The central bank kept the bottom interest rate unchanged to get ready for an additional deterioration of monetary conditions.
The BOK in a meeting on Thursday froze the interest rate at 1.twenty five percent. Expectations were high that the central bank would slash it on fears of an enormous monetary impact from the outbreak and collapsing consumer spending. But BOK Governor Lee Ju-yeol said "We must see if the problem becomes more prolonged than we estimate."
The central bank also acknowledged the strong potential for Korea's economy shrinking in the first 90 days of the year. The economy have been expected to rebound, but the coronavirus crisis threw a spanner in the wheels, with consumer and business sentiment sharply down in February.
Global ratings organizations and investment banks have designated Korea as the largest victim of the epidemic and also have even forecast zero growth this season.
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