South Korean Central Bank Keeps Rates, Expects Economy To Recover

The Republic of Korea's central bank on Friday said that it is keeping its lending rate at 1.25% as the country's economy shows signs of recovery.

What Happened

The Bank of Korea, in its first such announcement this year, said that the "sluggishness" in the domestic economy has eased.

The United States and the People's Republic of China agreement on phase one of their trade deal is set to bring further recovery to the semiconductor business, the bank said.

The semiconductor businesses, including Samsung Electronics Co. Ltd. SSNLF and SK Hynix Inc. HXSCL, play a key role in Korea's economy.

What's Next

The move is in line with wider expectations, as all but one of the 22 analysts polled earlier by Bloomberg had anticipated no rate cut from the bank.

Almost all the analysts expect the bank to keep the rate steady throughout 2020, Bloomberg said. Bank of Korea made two rate cuts last year.

"The BOK will probably stay pat at least for the first quarter as it watches its two cuts last year feeding through," Stephen Lee, a Seoul-based economist, told Bloomberg.

"Should growth fall short of expectations, though, arguments for another rate cut would start gaining momentum in the next quarter."

Stock Performance

South Korea's benchmark index KOSPI was up 0.11% at 2,250.574 at press time.