S. Korea to maintain modest recovery trend: BOK

Updated: 2013-06-13 11:09


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SEOUL-The South Korean economy was expected to maintain its modest recovery trend in accordance with the gradual global recovery, the central bank said Thursday after freezing the policy rate at 2.5 percent.

 "In the coming months, the South Korean economy is expected to maintain its modest uptrend in line with the gradual recovery of the global economy," Bank of Korea (BOK) said in a statement following the June monetary policy meeting.

The BOK left its benchmark seven-day repurchase rate unchanged at 2.5 percent this month after cutting the rate by 25 basis points in the prior month.

Regarding the future growth path, the bank said that there were upside risks to the economy such as the possible acceleration in economic growth coming from the prior month's rate cut and execution of the supplementary budget.

The Ministry of Strategy and Finance unveiled the extra budget plan of 17.3 trillion won (15 billion U.S. dollars) in mid-April after slashing its 2013 growth outlook from 3 percent to 2.3 percent.

The BOK pointed out the downside risks facing the economy, citing the heightened volatility in the value of the Japanese yen and the possible setback in production caused by shortfalls in power supply during the summer season.

The bank said in another statement that there remained external uncertainties such as the earlier-than-expected tapering off of U. S. quantitative easing and the implementation of fiscal consolidation in major economies.

The BOK said it will monitor the effects of the previous month' s rate cut and the government's stimulus policies such as the supplementary budget, while closely monitoring the trends of changes in external risk factors.