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Bank of Korea keeps policy rate steady at 1.25% Updated: 2020-01-17 16:33:36 KST

At its first monetary policy board meeting of the New Year, the Bank of Korea on Friday froze its benchmark interest rate at 1.25 percent for January.
This comes after it kept its all-time-low rate steady last November, following a 25 basis point rate cut the previous month.

"Today, we have decided to keep the key interest rate steady as some of the uncertainties coming from external factors, such as the U.S.- China trade dispute, are slightly improving.
And so we have decided to also consider financial safety by waiting to see how the local economy improves at this rate."

Friday's decision was expected by the Korea Financial Investment Association.
The association said that, despite concerns over sluggish growth, South Korea's economic index has improved since the last rate cut.
It says there are signs of a recovery in demand for and in the price of semiconductors, which are South Korea's single largest export item.
In addition, with the U.S. and China having made progress in their trade talks, expectations for an economic recovery are growing.

"The central bank is not likely to change the key interest rate in the first half of the year.
If it decides to increase the key interest rate, then it means that global economic growth has picked up and South Korea's consumer price index is increasing."

South Korea's Finance Ministry also said in its monthly greenbook released on Friday that there has been a solid uptick in service output and consumption.
Sluggish exports and weaker construction investment continue to drag on South Korea's economy.
South Korea's exports dropped 5.2 percent on-year in December.
Some uncertainties remain, such as how quickly the U.S. and China make progress on 'Phase Two' of their trade deal, as well as the heightened tensions in the Middle East.
The ministry said it will strengthen its risk management and work to implement necessary fiscal measures.
The Bank of Korea also pledged to carefully manage its monetary policy to ensure the growth recovery is maintained.
Hong Yoo, Arirang News.
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