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BOK Keeps Key Rate Unchanged at 1.25%

Written: 2016-12-15 13:35:29Updated: 2016-12-15 15:21:54

BOK Keeps Key Rate Unchanged at 1.25%

Anchor: The nation's central bank retained the key interest rate at one-point-25 percent for the sixth straight month in the wake of the U.S. Federal Reserve's rate hike. 
Bae Joo-yon has more. 

Report: The Bank of Korea(BOK) has again kept the key interest rate steady at one-point-25 percent.
 
The decision came at a monthly meeting of the central bank's monetary policy committee on Thursday morning.
 
The benchmark rate has been unchanged for the sixth consecutive month, after it was slashed by a quarter of a percentage point in June.
 
Analysts said that the BOK remains cautious since its hands are tied by uncertainties at home and abroad, such as growing household debt and the U.S. Federal Reserve’s rate hike.
 
The Fed raised the range of the federal funds rate by a quarter of a percentage point to zero-point-five percent and zero-point-75 percent on Wednesday and hinted that three more hikes are possible next year.
 
The U.S. rate hike has left the BOK with less room to lower its benchmark rate further considering that a narrow rate gap with the U.S. could trigger an outflow of foreign capital from South Korea.
 
Another worry for the BOK is that a rate hike could weigh on an economic recovery, even when the economic growth rate is predicted to hover around two percent next year.
 
In particular, a higher rate means a heavier burden for indebted households.
 
Given these factors, the BOK is expected to take on a wait-and-see approach and leave the key rate unchanged for the time being. 
Bae Joo-yon, KBS World Radio News.

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