South Korea’s central bank is generally predicted to freeze its base rate at a historic low of 0.5 per cent this week over protracted economic instability with flare-ups in new coronavirus events, experts said Monday.
The Bank of Korea is due to hold its monetary policy board meeting on Thursday.
“Affected by the virus resurgence, the nation’s job market and private spending have remained sluggish. So, there’s a high chance for the central bank to maintain its base rate frozen near-zero,” said Kim Jung-sik, a professor of economics at Yonsei University.
The number of jobs fell from 982,000 a year to 25.8 million in January, the biggest annual employment loss since 1998, when the Asian financial crisis struck the economy, according to figures from Korea.
Again, the overall card spending, including credit and debit card payments, declined by 2 per cent last month, widening the downtrend from a 3.9 per cent decrease in December last year, according to reports.
The BOK cut the benchmark interest rate to an all-time low of 0.5 per cent in May last year, after an immediate rate drop of 0.75 per cent in March, to pump liquidity into banks, companies and households hard hit by the COVID-19 crisis.
The predicted freeze of interest, if confirmed, would be the sixth of its kind. The central bank froze at its rate-setting meetings in July, August, October, November last year as well as in January this year.
“Working in tandem with the government’s expansionary fiscal policy, the central bank is likely to continue with its easing monetary drive,” Kim Yu-mi at Kiwoom Securities said.
A fourth round of COVID-19 relief funds has been negotiated between the Ministry of Economy and Finance and relevant ministries. The draft proposal for the additional stimulus package, including the timing and size of the handouts, is expected to be released as early as this week, officials said.