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[Alpha Biz=(Chicago) Reporter Paul Lee] The Bank of Korea has decided to maintain its benchmark interest rate of 3.5% per annum.
The Bank of Korea held a monetary policy direction meeting of the Monetary Policy Committee on November 11 and made the decision. The benchmark interest rate has been frozen for eight consecutive times since it rose from 3.25 percent a year in January last year to 3.5 percent a year. "The prices are still high," Bank of Korea Gov. Lee Chang-yong said in a press conference held shortly after the Monetary Policy Committee. "We decided that it is appropriate to check internal and external policy conditions while maintaining the current tightening stance with the consensus of all Monetary Policy Committee members."
The Bank of Korea virtually made it official that it would not raise its key interest rate any further. Three months later, all five members of the Monetary Policy Committee proposed 3.5% per annum on the standard interest rate level, judging that there is no need to raise interest rates. Last time, the Monetary Policy Committee said it should leave open the possibility of raising the rate to 3.75% per annum, which was four more than two members who said it should maintain 3.5% per annum. Governor Lee also said, "We believe that the need for an additional rate hike is lower than before."
The U.S. Consumer Price Index (CPI) in December last year, released by the U.S. Department of Labor, also rose 3.4 percent on-year. Exceeding expert estimates (3.2%) compiled by the Wall Street Journal (WSJ), it poured cold water on expectations that the U.S. Central Bank (Fed) would cut interest rates early.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
