SEOUL, Jan. 18 (Xinhua) -- South Korea's central bank kept its benchmark interest rate Thursday, after raising it by a quarter percentage point in late November, on worry about rising debt-serving burden among households.
At the first rate-setting meeting in 2018, Bank of Korea (BOK) Governor Lee Ju-yeol and six other policy board members decided to put the seven-day repurchase rate on hold at 1.5 percent.
It was in line with market expectations. According to a Korea Financial Investment Association (KFIA) survey of 100 fixed-income experts, 99 percent predicted the rate freeze.
The experts predicted the BOK would wait and see as the central bank raised the benchmark rate by 25 basis points in late November, the first rate increase in almost six and a half years.
A fast rate hike could sharply increase the debt-servicing burden for households, which were already struggling to pay back massive mortgage loans.
The four-year term of Governor Lee was scheduled to terminate by the end of March. Lee was forecast to maintain his wait-and-see stance as he favored an accommodative monetary policy during his tenure.
Lee, who was named as the top central banker under the presidency of impeached Park Geun-hye, decided to cut the BOK's policy rate from 2.5 percent to an all-time low of 1.25 percent in June 2016 during his term that started in April 2014.
Lee's policy encouraged households to purchase new home with borrowed money, expanding the already massive household debts from about 1,000 trillion won (940 billion U.S. dollars) to around 1,400 trillion won (1.3 trillion U.S. dollars) while he was in office.
South Korea's economy showed signs of recovery. Real gross domestic product (GDP) expanded 1.5 percent in the July-September period compared with the previous three-month period.
Based on the higher-than-expected GDP expansion during the third quarter, the finance ministry revised up its 2017 growth outlook for the economy by 0.2 percentage points to 3.2 percent.
