By Kwanwoo Jun
South Korea's central bank kept its policy rate unchanged on Friday after cutting it twice this year, while lowering its growth and inflation forecasts for this year and the next.
The Bank of Korea held its benchmark interest rate steady at 1.25% as widely expected, but BOK Gov. Lee Ju-yeol said the rate decision was not unanimous with one dissenting board member calling for a rate cut, a sign the bank is still under pressure to ease.
It was the year's last rate-setting meeting and the bank is still waiting for its earlier rate cuts in July and October to work through the economy.
Gov. Lee told a press conference that there was still room for more policy action, indicating the bank could cut rates further if necessary to support growth.
The bank now expects South Korea's gross domestic product to expand 2.0% in 2019 and 2.3% in 2020--slower than its July growth estimates of 2.2% and 2.5%, respectively, Gov. Lee said.
The bank forecasts inflation may come in at 0.4% this year and 1.0% next year, softer than its earlier forecasts of 0.7% and 1.3%, respectively, Mr. Lee said.
Last year, the Korean economy expanded 2.7%, its slowest pace in six years, and inflation averaged 1.5%.
All seven economists polled by The Wall Street Journal ahead of the decision had expected the bank to stand pat this month but some still forecast more rate cuts next year to stimulate the sagging economy.
Exports, the country's main growth engine, are widely expected to contract on year for the 12th consecutive month in November, with inflation staying far below the bank's 2% annual target.
The Bank of Korea may continue its easing cycle next year despite its decision to stand pat this time, Capital Economics' Asia economist Alex Holmes said. He expects more rate cuts with growth set to remain subdued and price pressures likely to stay weak in South Korea.
Write to Kwanwoo Jun at email@example.com
(END) Dow Jones Newswires
November 28, 2019 22:59 ET (03:59 GMT)
Copyright (C) 2019 Dow Jones & Company, Inc. All rights reserved.