SEOUL — South Korea's central bank, the Bank of Korea (BOK), announced on Thursday that it will keep its benchmark seven-day repo rate steady at 3.5 percent for the sixth consecutive time. This decision comes amid a series of complex factors affecting the country's economy, including a slowdown in growth and a variety of geopolitical uncertainties.
According to Yonhap News Agency, this marks the sixth time in a row the BOK has maintained the rate, following rate freezes in February, April, May, July, and August. The decision also followed seven consecutive rate hikes from April 2022 to January 2023. The BOK stated that although inflation is slowing down, uncertainties have risen significantly due to various international factors, including the ongoing Ukraine-Russia conflict and the Israel-Hamas conflict, as well as rising household debt within the country.
The central bank also revised down its growth projection for Asia's fourth-largest economy to 1.4 percent from 1.6 percent. The country's economy grew by 0.6 percent in the second quarter of this year but is grappling with numerous challenges including a 12-month decline in exports and economic risks stemming from its largest trading partner, China. Household debt, which has been increasing for six straight months, and the growing rate gap between South Korea and the United States, also played a role in the central bank's decision.