S. Korea Says Further Rate Cut Possible

SEOUL, (UrduPoint / Pakistan Point News - 11th Augst,2016) : South Korea's central bank governor on Thursday held out the prospect of yet another reduction in interest rates which are already at a record low following a cut in June. At its monthly meeting, the monetary board of the Bank of Korea (BOK) opted to keep its key rate unchanged at 1.25 percent for August. The decision was widely expected, but governor Lee Ju-Yeol made it clear the bank was not ruling out an even lower rate in the future if the economy required an additional boost.

"It is true that we will be nearing the lower limit if we continue to reduce the key rate," Lee told a press briefing. "But we do not believe we have exhausted all our monetary policy options," he was quoted as saying by the Yonhap news agency. Most analysts believe the rate will remain unchanged for several months at least, as the BOK board assesses the impact of its last cut and a 20-trillion-won ($17-billion) stimulus package unveiled in late June.

Asia's fourth-largest economy posted marginally improved growth in the second quarter as exports and domestic consumption picked up. According to the BOK, the economy grew 0.7 percent in the April-June period from the previous quarter and 3.2 percent compared to a year earlier. "The board forecasts that the domestic economy will sustain its trend of modest growth going forward," the board said in a statement Thursday. But there is growing concern over the level of household debt which stood at nearly $1.12 trillion at the end of March. "I do believe there may be a need to come up with additional measures if necessary, because I believe such a steady and prolonged rise in household debt is not desirable," Lee said.