South Korea freezes policy rate at record low

Seoul:  South Korea's central bank on Thursday froze its benchmark interest rate at a record low of 1.5 percent, keeping a wait-and-see stance for nine months in a row. Bank of Korea (BOK) Governor Lee Ju-yeol and six other policy makers refrained from altering the benchmark seven-day re-purchase rate at an all-time low of 1.5 percent, Xinhua news agency reported. The bank cut the rate by 25 basis points in March and June 2015 each to the current level, after lowering it by the same margin in August and October 2014. It was in line with market consensus, but expectations increased for additional rate cuts due to lackluster exports and slowing industrial activity. According to a Korea Financial Investment Association (KFIA) survey of 200 fixed-income experts, 72.5 percent predicted the rate freeze in March. It was much lower than 99 percent tallied in February. Rate cut hopes were triggered by one of the BOK board members who cast a dissenting vote in February in favour of an additional cut by 25 basis points. The member cited falling exports and the weakening of domestic demand as reasons for more accommodative monetary policy. Exports, which account for about half of the export-driven economy, declined 12.2 percent in February from a year earlier, keeping a downward momentum for 14 months in a row. South Korea's industrial production shed 1.2 percent in January on a monthly basis, causing concerns about private consumption as well as exports.