South Korea freezes interest rates

Seoul, April 11 (IANS) South Korea’s central bank Thursday kept its benchmark interest rate on hold at 2.75 percent despite the government’s pressure to cut rates to revitalize the economy.

Bank of Korea (BOK) Governor Kim Choong-soo and the monetary policy board members decided to freeze the seven-day repurchase rate at 2.75 percent, keeping its wait-and-see stance for six straight months. The bank cut the rate by 25 basis points in July and October last year, reported Xinhua.

The decision was made despite the unprecedented government pressures on BOK to cut rates following the government’s downgrade of its 2013 economic growth forecast from 3 percent to 2.3 percent.

“A fundamental problem with the government’s new forecast is that it does not provide any specific rationale for the downgrade,” Kwon Young-sun, an economist at Nomura in Hong Kong said in a report.

“No detailed forecasts were provided for GDP components such as consumption, investment and exports.”

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