SEOUL, Jan. 24 (Xinhua) -- South Korea's central bank froze its benchmark interest rate at 1.75 percent on Thursday on worry about economic slowdown.
Bank of Korea (BOK) Governor Lee Ju-yeol and six other monetary policy board members decided to leave the main seven-day repurchase rate on hold at 1.75 percent, after raising it by a quarter percentage point to the current level in November last year.
It was in line with market expectations. According to a Korean Financial Investment Association survey of 200 fixed-income experts, 99 percent predicted a rate freeze this month.
The rate freeze came on rising concern about an economic slump. The country's real gross domestic product (GDP), adjusted for inflation, grew 2.7 percent in 2018 from a year earlier, after expanding 3.1 percent in the previous year.
Last year's GDP growth was the lowest in six years as companies refrained from spending money on new facilities amid the lingering external uncertainties.
Export, which accounts for about half of the South Korean economy, turned downward in December on soft demand for locally-made semiconductors that led the country's export expansion last year.
In the Jan. 1-20 period of this year, the export shrank 14.6 percent compared with the same period of last year on a double-digit reduction in chip export.
Outlook for the global economy worsened, dimming growth forecast for the export-driven South Korean economy.
The International Monetary Fund lowered this year's growth outlook for the world economy by 0.2 percentage points to 3.5 percent earlier this week, while cutting next year's forecast by 0.1 percentage point to 3.6 percent.
Inflationary pressure remained low, reducing pressure on the BOK to hike rate. South Korea's consumer price gained 1.5 percent in 2018 from a year earlier, after going up 1.9 percent in the previous year.
It missed the BOK's inflation target of 2 percent. In December last year, the headline inflation was 1.3 percent, falling below 2 percent in three months.
Despite the concern about economic slowdown and the low inflationary pressure, the BOK was forecast to raise its policy rate later this year given the widening gap between interest rates between South Korea and the United States.
The BOK governor told a press conference that worry remained about the economic slump amid signs of the global economic slowdown, but he noted that possibility was low for a rapid slump of the South Korean economy.
