SEOUL, June 13 (Reuters) - The Bank of Korea held interest rates steady in a unanimous vote on Thursday and its governor hinted that it would raise this year's 2.6 percent economic growth forecast when it publishes revised views next month.
But Governor Kim Choong-soo told reporters that heightened uncertainties surrounding a possible tapering-off of the U.S. central bank's quantitative easing sooner than expected were a risk to the local economy.
The Bank of Korea's monetary policy committee left its base rate unchanged at 2.50 percent on Thursday after cutting it by 25 basis points in May in a surprise move and for the first time in seven months.
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- TEXT of central bank statements
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- Reuters survey: All 22 analysts from a Reuters survey forecast the Bank of Korea would hold rates steady on Thursday. Fourteen out of the surveyed analysts saw rates would be kept on hold at least until the end of the year.
- CHRONOLOGY on past rate changes
RONALD MAN, ECONOMIST, HSBC, HONG KONG
'The Bank of Korea's decision to hold was unanimous and it was to observe the impact of the previous rate cut. Given monetary policy takes at least 3 months to start impacting the economy, this suggests the central bank will be in wait and see mode over the coming months. If growth in H2 2013 continues to weaken, pressure may build on policymakers to deliver more stimulus.'
'Governor Kim stated that growth is in line with the BoK's forecast. There may be downside risks to growth in H2 2013 because government support was front-loaded into H1 and we have seen weaker activity from China. Policymakers in Seoul will likely maintain its focus on FX stability, rather than the strength.'
KIM SU-MAN, STRATEGIST, IBK SECURITIES
'I expect the rate to be left steady till the end of this year.'
'What is important is when the exit strategy of the Fed will start. I do not think BOK will preemptively use the rate card before the Fed implements an exit.'
'Even if the won drops sharply, I do not think BOK will raise the interest rates to stop the capital outflow.
JUNG SUNG-WOOK, FIXED-INCOME ANALYST, KTB SECURITIES
'After the rate cut in May, I don't see any additional cuts as further economic slowdown doesn't seem likely in the second or third quarter.
'Also, given the possibility of the Fed's substantial policy change, the Bank of Korea will have only a limited room for action.'
- South Korean markets showed a muted reaction as investors paid more attention to the turbulent overseas markets such as the falling Japanese stocks and currency on Thursday.
- The Seoul stock market's KOSPI fell 1.17 percent to 1,887.56 points by 0319 GMT, the won was down 0.09 percent at 1.134.6 per dollar and June futures on 3-year treasury bonds were up 0.14 points at 105.98.
(Reporting by Christine Kim, Ju-min Park, Narae Kim; Editing by Choonsik Yoo) Keywords: KOREA ECONOMY/RATES
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