They cited the country’s volatile dollar/won exchange rate as the main reason for a rate freeze at the central bank’s last monetary policy meeting for 2024.“3.25% is not a restrictive level (to the economic growth),” said Lee Seung-heon, a professor at the business management department of Sungsil University and former BOK deputy governor.“Big rate cuts could further strengthen the US dollar against the Korean won above 1,400 and set off a jump in real estate prices, which could result in economic instability.”Lee Seung-hoon, an economist at Meritz Securities Co., also bet on a rate hold, saying that concerns about the highly volatile dollar/won rate outweigh concerns over domestic demand for now.
Park Seok-gil, executive director of JPMorgan Chase Bank Asia Economic Research, projected the Korean economy will grow less than 1.8% next year due to the country’s fizzling exports and weak domestic consumption.“Korea’s potential economic growth rate has already retreated to the 1.8% range, meaning the country’s economy would grow 1.8% next year,” said NH Investment & Securities economist Ahn Ki-tae.
South Korea’s central bank is expected to freeze its policy rate at 3.25% during its last monetary policy meeting for this year to prevent any further fall in the country’s currency value against the US dollar despite a gloomy outlook for the country’s economic growth next year, according to a survey conducted by the Korea Economic Daily on Monday.
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