The Bank of Korea kept its base rate unchanged at 1.25 percent on January 17th 2020, as widely expected, amid easing global trade tensions and signs of domestic economic recovery following efforts from the government to step up fiscal spending. Policymakers said they will maintain accommodative monetary policy stance ahead as inflationary pressures on the demand side will remain low and the economy will grow moderately. The Committee will closely monitor any development in global trade disputes, major countries' economy and geopolitical risks and decide whether to adjust the degree of monetary policy accommodation. The government recently announced that 62 percent of the state budget to be implemented in the first half of the year. Interest Rate in South Korea averaged 3.11 percent from 1999 until 2020, reaching an all time high of 5.25 percent in October of 2000 and a record low of 1.25 percent in June of 2016. source: The Bank of Korea

Interest Rate in South Korea is expected to be 1.25 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in South Korea to stand at 1.25 in 12 months time. In the long-term, the South Korea Interest Rate is projected to trend around 1.25 percent in 2020, according to our econometric models.

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South Korea Interest Rate

Actual Previous Highest Lowest Dates Unit Frequency
1.25 1.25 5.25 1.25 1999 - 2020 percent Daily

Calendar GMT Actual Previous Consensus TEForecast
2019-08-30 01:00 AM 1.5% 1.5% 1.5% 1.50%
2019-10-16 01:00 AM 1.25% 1.5% 1.25% 1.25%
2019-11-29 01:00 AM 1.25% 1.25% 1.25% 1.25%
2020-01-17 01:00 AM 1.25% 1.25% 1.25% 1.25%
2020-02-27 01:00 AM 1.25% 1.25%

News Stream
South Korea Holds Base Rate at 1.25%
The Bank of Korea kept its base rate unchanged at 1.25 percent on November 29th 2019, as widely expected, as policymakers assessed the effect of its recent rate cuts. Meanwhile, amid weakening consumption growth and sluggishness in exports and facilities investment, the board lowered economic growth forecast to 2 percent from the previous estimate of 2.2 percent for this year and to 2.3 percent from 2.5 percent next year. Inflation projection was also revised down to 0.4 percent for this year from the previous 0.7 percent. The bank also said it will judge whether to adjust monetary policy accommodation, while carefully monitoring the US-China trade negotiations, geopolitical risks and and financial stability conditions.

South Korea Cuts key Rate by 25 Bps to 1.25%
The Bank of Korea lowered its policy rate by 25 basis points to its lowest level in two years of 1.25 percent in a 5-2 vote. This was the second rate cut in three months, amid mounting deflationary pressures and a slowdown in the economy, with consumption growth weakening and sluggishness in exports and facilities investment persisting. The bank added that growth this year is expected to fall below the 2.2 percent projection made in July, amid the prolonged US-China trade dispute and the heightened geopolitical risks. Policymakers left the door open for further easing although a split vote on the latest move suggested the next reduction may not be imminent.

Bank of Korea Leaves Monetary Policy Unchanged
The Bank of Korea held the 7-day base rate steady at 1.50 percent during its August meeting, following a 25 bps cut last month. Policymakers noted that the pace of domestic economic growth has remained slow while uncertainties concerning the growth path forecast have further increased, due mainly to the escalation of the US-China trade dispute and the heightened geopolitical risks. Meanwhile, inflationary pressures on the demand side are expected to remain subdued. The bank said it will judge whether to adjust the degree of monetary policy accommodation in the near term, while closely examining any changes in macroeconomic and financial stability conditions.

South Korea Cuts Rates for 1st Time Since 2016
The Bank of Korea unexpectedly lowered its base rate by 25 basis points to 1.5 percent on July 18th 2019. This was the first adjustment in benchmark rate since November last year and the bank's first rate cut in three years, amid efforts to spur economic growth on the back of rising global uncertainties following a trade dispute with Japan and tariff war between US and China. Policymakers also revised lower 2019 GDP growth outlook to 2.2 percent from an earlier estimate of 2.5 percent, mentioning weak demand at home and abroad and a delayed recovery in the global IT sector. In the first half of the year, the economy is expected to grow by 1.9 percent and by 2.4 percent in the second half. Meanwhile, 2019 inflation rate is estimated to be at 0.7 percent, below an earlier projection of 1.1 percent.

South Korea Keeps Rate Unchanged at 1.75%
The Bank of Korea held its base rate steady at 1.75 percent on May 31st 2019 in the face of growing risks to the economy, including faltering exports and escalating Sino-US trade tensions. That said, policymakers reiterated they will carefully monitor any changes in the economies and monetary policies of major countries, financial and economic conditions in emerging market economies, the trend of increase in household debt, and geopolitical risks, while examining their effects on domestic growth and inflation.

South Korea Holds Rates, Lowers Outlook Forecasts
The Bank of Korea kept its base rate unchanged at 1.75 percent on April 18th 2019, as widely expected. Policymakers reiterated domestic economy will continue to grow at a rate that does not diverge significantly from its potential level and inflationary pressures on the demand side will not be high. That said, amid rising global headwinds and softening exports, the Bank of Korea lowered its economic growth forecast for 2019 to 2.5 percent from an earlier estimate of 2.6 percent made in January. The latest GDP growth outlook is now lower than both Finance Ministry's growth target of 2.6- 2.7 percent and the International Monetary Fund/IMF's forecast of 2.6 percent for 2019. Policymakers also revised down inflation target to 1.1 percent from an earlier of 1.4 percent.

South Korea Interest Rate
In South Korea the interest rates decisions are taken by the Bank of Korea’s (BOK) Monetary Policy Committee. The official interest rate is the Bank of Korea Base Rate which was changed from overnight call rate on March 2008.

South Korea Money Last Previous Highest Lowest Unit
Interest Rate 1.25 1.25 5.25 1.25 percent [+]
Money Supply M0 112775100.00 111353300.00 112775100.00 11200.00 KRW Million [+]
Money Supply M1 912800.90 893735.20 912800.90 260.40 KRW Billion [+]
Interbank Rate 1.44 1.44 6.14 1.27 percent [+]
Money Supply M2 2903991.80 2865665.10 2903991.80 590.60 KRW Billion [+]
Money Supply M3 4101120.70 4064519.70 4101120.70 57007.90 KRW Billion [+]
Foreign Exchange Reserves 408820.00 407460.00 408820.00 564.50 USD Million [+]
Loans to Private Sector 8689783.00 8751577.00 8751577.00 2603700.00 KRW Hundred Million [+]
Deposit Interest Rate 1.63 1.64 19.50 1.37 percent [+]
Private Debt To GDP 260.80 253.30 260.80 237.30 percent [+]
Lending Rate 2.25 2.25 2.50 2.25 percent [+]
Central Bank Balance Sheet 492518.80 490202.60 510090.10 310.30 KRW Billion [+]
Foreign Stock Investment 688696.70 708835.90 776917.60 34948.20 USD Hundreds of Millions [+]