South Korea’s central bank plans to keep monetary policy accommodative for a while to help face challenges inside and outside the country, its governor said on Friday after cutting interest rates to a record low 1.25 percent the day before.
“Considering the economic situation inside and outside the country it will be difficult for our economy to escape low growth and low inflation quickly,” Bank of Korea Governor Lee Ju-yeol said in an address to mark the 66th anniversary of the bank’s founding.
“Going forward, monetary policy will be kept accommodative with economic recovery in focus.”
South Korea’s exports were unlikely to rebound strongly anytime soon because the delayed recovery in key economies was slowing down global trade, Lee said.
The BOK governor also noted that South Korea faced low birth rates, an ageing population and mounting household debt that were holding back recovery in domestic consumption.
Lee’s comments followed a day after the central bank unexpectedly lowered rates for the first time in a year, citing weak trade and potential risks from ongoing corporate restructuring as reasons for the easier policy.
A poll conducted by Reuters later on Thursday showed analysts’ expectations were divided almost evenly between another rate cut by year-end and no change for the rest of 2016.