“South Korea’s central bank kept interest rates on hold as officials monitor the won’s gains against the yen and look ahead to policy changes after President Park Geun Hye takes office Feb. 25.
Governor Kim Choong Soo and his board kept the benchmark seven-day repurchase rate at 2.75 percent after a 25 basis point cut in October, the central bank said in a statement in Seoul today. For a second month, the decision was not unanimous. Fourteen of 15 economists surveyed by Bloomberg News predicted the decision and one forecast a cut.
Japan’s “expansionary policy operations” and fiscal tightening in advanced nations are among risks for a South Korean economy that is showing signs of gradual improvement, the central bank said. The frontloading of government spending in the first half of the year is already giving growth a boost and Deutsche Bank AG says a supplementary budget may be announced by Park’s administration in March.
The central bank may “decide in March to see if fiscal stimulus is sufficient in terms of size and scope to reduce the level of uncertainty in the economy,” said Wai Ho Leong, a senior regional economist at Barclays Capital in Singapore.
The won gained 0.2 percent to 1,084.80 per dollar at 10:42 a.m. in Seoul, according to data compiled by Bloomberg. It earlier rose as high as 1,084.27, near the strongest level since Feb. 6. The won was little changed at 11.60 per yen, according to data compiled by Bloomberg.
