![South Korea holds rates steady, investors eye timing of pivot](https://i-invdn-com.investing.com/trkd-images/LYNXNPEK1L015_L.jpg)
© Reuters. FILE PHOTO: The emblem of the Bank of Korea is seen on the highest of its constructing in Seoul, South Korea, March 8, 2016. REUTERS/Kim Hong-Ji/File Photo
By Cynthia Kim and Jihoon Lee
SEOUL (Reuters) -South Korea’s central financial institution left rates of interest at a 15-year excessive on Thursday amid indicators that the weaker financial system is slowing inflation, with buyers zeroing in on Governor Rhee Chang-yong’s feedback on the timing of a coverage pivot later this 12 months.
The Bank of Korea (BOK) held its benchmark rate of interest at 3.50% at a coverage assessment in Seoul, retaining it unchanged for a ninth straight assembly as anticipated by all 38 analysts polled by Reuters.
The BOK saved its financial development forecast for this 12 months unchanged at 2.1% and inflation at 2.6%, it stated together with the speed announcement.
South Korea’s 300 foundation factors of rate of interest hikes have stalled financial development in Asia’s fourth-largest financial system as building funding took a success from increased borrowing prices at the same time as exports continued to enhance.
In a post-policy information convention, Governor Rhee is predicted to hitch world friends such because the Federal Reserve and the Reserve Bank of Australia in pushing again towards any bets on a near-term easing as inflation, whereas cooling, continues to be above the central financial institution’s goal of two%.
In January, Rhee warned markets towards rallying on untimely expectations for a price lower and stated he sees little or no likelihood of price cuts for the subsequent six months with inflation nonetheless excessive.
Data launched since then confirmed shopper inflation hit a six-month low of two.8% in January, nonetheless removed from the central financial institution’s goal of two% however easing for a 3rd straight month principally as a consequence of a fall in oil costs.
“With inflation cooling and growth set to struggle, we don’t think cuts are far away,” Gareth Leather, an economist at Capital Economics stated in a report after the speed choice.
“With inflation concerns easing, we are expecting the central bank to start sounding more dovish.”
BOK board members have warned appearing too quickly might set off a resurgence in worth pressures particularly as a consequence of upside dangers from supply-side constraints.
The consensus forecast from analysts is that the BOK will begin chopping charges within the third quarter of this 12 months, however that will largely rely on when the Federal Reserve begins reducing it charges, analysts say.
Thursday’s price choice was the primary for board member Hwang Kun-il, who started his three-year time period on Feb. 13.
Rhee holds a information convention at round 0210 GMT, which will likely be livestreamed through YouTube.