South Korea’s central bank left its policy rate unchanged for a seventh month on Friday, reflecting caution about financial stability in the face of slowing growth.
The central bank said in a statement that it expects gross domestic product to grow by mid-2 percent this year, versus an October forecast of 2.8 percent. It said inflation would reach its 2 percent target by mid-year.
The Bank of Korea kept the seven-day repurchase rate at a record-low 1.25 percent, a decision expected by all 21 economists surveyed by Bloomberg.
“South Korea’s exports-driven economy, seen as a bellwether for global trade, was hit hard by a slowdown in China last year,” said Stephen Innes, Singapore-based senior trader at foreign-exchange company Oanda. “But with signs China’s economy is improving and global inflation is rising, there was less incentive for the BOK to cut rates.”
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