The Bank of Korea's monetary policy board on Thursday voted to keep the nation's benchmark interest rate unchanged at the record low 1.25 percent for the fourth straight month.
That followed June's surprise rate cut by 25 basis points from 1.50 percent after 10 straight meetings without a move.
"The board forecasts that the domestic economy will sustain its trend of modest growth going forward, owing chiefly to a gradual recovery in global trade and to the effects of expansionary macroeconomic policies," the bank said in a statement accompanying the decision.
Extremely low inflation allowed the bank the flexibility to hold fire as consumer prices were up just 0.4 percent on year.
A rebound in consumer prices allowed the bank to take no action.
Inflation was up 1.2 percent on year in September, accelerating sharply from the 16-month low 0.4 percent in August. On a monthly basis, CPI gained 0.6 percent after slipping 0.1 percent in the previous month.
Core CPI, which excludes food prices, added 0.1 percent on month and 1.3 percent on year. That follows the 0.3 percent monthly decline and the 1.1 percent yearly gain in August.
"The board forecasts that consumer price inflation will gradually rise, due mainly to the disappearance of the effect of the temporary cut in electricity fees and to the rebound in international oil prices," the bank said.
Much of the other data was mixed as industrial production was down 2.4 percent on month in August, following the downwardly revised 1.3 percent gain in July (originally 1.4 percent).
On a yearly basis, industrial production advanced 2.3 percent after rising 1.6 percent in the previous month.
But retail sales climbed 2.0 percent on month in August, following the upwardly revised 2.5 percent decline in July (originally -2.6 percent).
On a yearly basis, retail sales spiked 6.0 percent following the upwardly revised 4.4 percent jump in the previous month (originally 4.3 percent).
"The board will conduct monetary policy so as to ensure that the recovery of economic growth continues and consumer price inflation approaches the target level over a medium-term horizon, while paying attention to financial stability," the bank said.
by RTT Staff Writer
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