April 26, 2024

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[THE INVESTOR] As the monetary policy committee of the country’s central bank is set to have its first meeting of the year on Jan.13, all eyes are fixed on their upcoming decision for benchmark interest rates and economic growth projection.

At the meeting on Friday, the committee will unveil its revised growth target and decide on an interest rate. In the previous projection in October, the Bank of Korea set its gross domestic product forecast at a 2.8 percent growth for 2017.

But the governor of the central bank had warned at the end of December that there were downward risks in the country’s economy this year. The South Korean government has also lowered the growth target at 2.6 percent on Dec. 29, 2016. 

If the Bank of Korea cuts its forecast, it would be the lowest since 2012.

South Korea’s economy grew 2.6 percent in 2015 and is expected to log a 2.7 percent growth in 2016.

The meeting will also discuss benchmark interest rates. It is expected to maintain the current interest rate of 1.25 percent and take a cautious observation as the US hikes its interest rate.

On Dec. 14, the US interest rates raised the benchmark interest rate by 0.25 percentage points from a rage from 0.25 percent to 0.50 percent to a rage from 0.50 percent to 0.75 percent, citing the improved situation in the US economy. The Federal Reserve warned that it would raise the benchmark interest rate three times in 2017.

On Dec. 15, the BOK’s financial and monetary board resolved to keep the interest rate at 1.25 percent a year. 

By Park Ga-young/The Korea Herald  (gypark@heraldcorp.com)