South Korea's central bank on Thursday froze the policy interest rate at 2.5% for the 14th straight month, shrugging off a minority voice that forecast a rate cut as the confirmation of a pro-growth finance minister nominee is under way.
In a news conference, Bank of Korea (BOK) Gov. Lee Ju-yeol said the seven-member monetary policy committee decided to keep the benchmark seven-day repo rate at the current level in a split vote. One unknown member voted against the freeze, Lee said without elaboration.
The BOK governor said growth slightly weakened despite firm exports as domestic demand weakened due largely to the Sewol ferry disaster in April that left more than 300 dead or missing, according to (Yonhap) News Agency.
Lee said while external risks have eased, the ferry sinking's impact on the South Korean economy is lasting longer than expected, adding that the committee views the downside risks as being bigger than the upside risks.
The BOK chief, however, retained his view from the June news conference that the present base rate level is "accommodative" to the current economy.
Regarding inflation, Lee said the committee expects inflation to gradually rise but inflationary pressure to likely be weaker than expected.