Roundup: S.Korea freezes policy rate at 1.75 pct on worry about economic slump

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SEOUL, May 31 (Xinhua) -- South Korea's central bank left its policy rate unchanged Friday, keeping a wait-and-see stance since November last year on worry about economic slump.

Bank of Korea (BOK) Governor Lee Ju-yeol and six other policy board members decided to freeze the benchmark seven-day repurchase rate at 1.75 percent.

It was not a unanimous decision. One board member cast a dissenting vote, calling for a 25-basis-point cut in the policy rate, the BOK governor told the press conference.

The governor noted that it could read too much to see the dissenting vote as a rate cut signal.

The rate freeze decision was in line with market expectations. According to a Korea Financial Investment Association (KFIA) survey of 200 fixed-income experts, 97 percent predicted a rate on freeze.

The BOK refrained from altering the rate since the bank raised its target rate by a quarter percentage point to 1.75 percent last November. In November 2017, the bank lifted the benchmark rate to 1.50 percent from an all-time low of 1.25 percent.

The wait-and-see position came amid the rising concern about economic slowdown, caused mainly by the continued fall of export that accounts for about half of the South Korean economy.

The outbound shipment kept sliding for five months through April on the downturn in business cycle of the global semiconductor sector and the global economic slump.

The export outlook dimmed amid the global trade dispute. The export during the May 1-20 period posted a double-digit reduction compared with the same period of last year.

The BOK said in a statement that the export and facility investment were forecast to recover in the second half, but it noted that economic uncertainties deepened on the global trade friction.

Influenced by the export slump, the real gross domestic product (GDP), adjusted for inflation, contracted 0.3 percent in the January-March quarter from the previous quarter.

The BOK revised down its 2019 growth outlook for the economy to 2.5 percent last month from 2.6 percent three months earlier, lower than the government's forecast of 2.6-2.7 percent.

The Organization for Economic Cooperation and Development (OECD) cut its growth forecast for the South Korean economy by 0.2 percentage points to 2.4 percent earlier this month.

The state-run Korea Development Institute (KDI) forecast last week that the export would shrink 6 percent this year, a sharp downgrade from a 4.6 percent expansion estimated six months earlier.

The ministry of economy and finance said in its monthly economic report, called Green Book, that downside risks faced with the economy expanded recently.

Private consumption, another growth engine of the economy, was forecast to offset the negative effect of the export fall due to the government's efforts to narrow income gap by boosting the earnings of the low-income bracket.

Labor market conditions improved on the government's job-creating projects, especially for the elderly people. The number of those employed increased 171,000 in April from a year earlier. Enditem

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