Bank of Korea seen holding in October on household debt risk
- Banks, telecoms lead Wall Street up; another Dow record
- Western Digital (WDC) Raises Q2 Outlook
- bluebird bio (BLUE) to Offer $200M of Common Stock
- Dave & Buster's Entertainment (PLAY) Tops Q3 EPS by 11c, Raises FY Revenue Guidance
- After-Hours Stock Movers 12/06: (PLAY) (ANTH) (WDC) Higher; (AVAV) (ESV) (BLUE) Lower (more...)
The logo of the Bank of Korea is seen on the top of its building in Seoul, South Korea, July 14, 2016. REUTERS/Kim Hong-Ji
Get access to the best calls on Wall Street with StreetInsider.com's Ratings Insider Elite. Get your Free Trial here.
By Cynthia Kim and Christine Kim
SEOUL (Reuters) - South Korea's central bank is forecast to keep interest rate policy on hold on Thursday as board members weigh the risks from household debt growing any faster, a Reuters poll found on Tuesday.
All but one of 24 economists surveyed by Reuters expect Governor Lee Ju-yeol and his board to leave the policy rate at a record low 1.25 percent following an unexpected cut in June and board votes to hold through September.
The sole prediction for another cut, to 1 percent, came from Korea Investment & Securities, and a slim majority of 14 economists said they see a reduction coming soon.
Some analysts, including those at Nomura Holdings, Standard Chartered Bank Korea, and HMC Investment & Securities pushed back their predictions of a rate cut and pointed out the rapid expansion in household debt as a renewed risk to growth.
South Korea's economic growth is being stifled by a slump in global demand and soaring household debt, highlighting the challenge of turning around exports that have fallen for just about all of the last 20 months while simultaneously stabilising financial markets against the volatility that could follow more policy tightening by the U.S. Federal Reserve.
Lawmakers berated the Bank of Korea (BOK) earlier this month in a parliamentary audit for not taking adequate measures to curb the household debt that rose to a record high of 1,257.3 trillion won ($1.13 trillion) in the June quarter.
Legislators accused the central bank of fuelling the debt surge when it started lowering interest rates from 2014, and cutting policy rates five times in total since then.
The minutes from the BOK's September meeting suggest the BOK may be in no rush to cut interest rates again, as board members warned against rising household debt and excessive credit growth on the back of loose monetary policy.
Inflation stepped up to a seven-month high of 1.2 percent in September from a year earlier, accelerating sharply from 0.4 percent in August.
Lee Jae-hyung, an economist at Yuanta Securities Korea said the growing inflationary pressure allows the BOK more room to delay any cuts.
The bank is due to revise its economic forecasts and hold an inflation briefing on Thursday afternoon.
It currently sees gross domestic product expanding 2.7 percent this year, and consumer prices rising 1.1 percent.
(Additional reporting by Dahee Kim, Yun Hwan Chae, Nataly Pak and Jeongeun Lee; Editing by Eric Meijer)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Ford makes contingency plans in case of China year-end tax surprise
- Sony to release as many as six mobile phone games next year
- Ship with 64 passengers on board sinks off Yemen coast: shipping sources
Create E-mail Alert Related CategoriesReuters
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!