S.Korea freezes interest rate at record low on worry about COVID-19
Source: Xinhua | 2020-10-15
South Korea’s central bank on Wednesday froze its benchmark interest rate at an all-time low amid the lingering worry about an economic fallout from the COVID-19 outbreak.
Bank of Korea (BOK) Governor Lee Ju-yeol and six monetary policymakers decided to leave the seven-day repurchase rate on hold at the record low of 0.50 percent.
The BOK lowered the target rate by 25 basis points to the current level in May, after slashing it by 50 basis points in March to tackle the economic downturn from the COVID-19 pandemic.
The rate freeze was in line with market expectations. According to a Korea Financial Investment Association survey of 200 fixed-income experts, 100 percent predicted the rate on hold.
Concerns remained about the economic slowdown from the pandemic. The COVID-19 resurged here in August and September owing to cluster infections in the Seoul metropolitan area linked to church services and a massive rally in central Seoul on Aug. 15.
The government eased its three-tier social-distancing guidelines to the lowest level from this week as the number of COVID-19 cases here grew at a relatively lower level for the past two weeks.
In the latest tally, the country reported 84 more cases of the COVID-19 for the past 24 hours, raising the combined number of infections to 24,889.
The daily caseload fell below 100 after recording 102 in the previous day, but small cluster infections continued in Seoul and its surrounding Gyeonggi province together with the expansion of imported cases.
The Korea Development Institute (KDI), the state-run economic think tank, said in its monthly economic assessment report earlier this week that the COVID-19 resurgence weakened the economy, especially the services sector.
Amid the resurgence, people refrained from outside activities such as offline shopping and eating out.
The seasonally-adjusted production in all industries, which exclude the agricultural, forestry and fishery sectors, fell 0.9 percent in August from a month earlier. It was the first decline in three months.
Output in the services industry reduced 1.0 percent in August, marking the first slide in five months.
Reflecting the weakened domestic demand, the composite consumer sentiment index (CCSI) dipped 8.8 points from a month earlier to 79.4 in September. It was the first fall in five months.
Retail sale, which reflects private consumption, slightly rose in August on a monthly basis due to demand for durable goods, such as cars and consumer electronics, but the sale of non-durable and semi-durable goods slumped in the month.
Amid the partial recovery in global demand, South Korea’s export advanced 7.7 percent in September from a year earlier. It marked the first turnaround in seven months since February.
Global demand for locally-made semiconductors and automobiles grew in double figures last month.
Helped by the export rebound, the business sentiment index (BSI) recovered in October.
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