S. Korean bonds close lower after BoK keeps policy rate steady

The South Korean government bonds closed lower Friday after the Bank of Korea left key policy rate unchanged at the record low. The 10-year bonds yield, which moves inversely to its price, increased 1-1/2 basis points to 1.410 percent and short-term 3-year bonds yield bounced nearly 1 basis point to 1.229 percent.

The Bank of Korea left the key policy rate unchanged at its record low of 1.25 percent. The latest decision suggests that the central bank is taking time out to assess the effects of recent policy easing on the economy.

The central bank governor Lee Ju-yeol said that the central bank would maintain its accommodative policy stance, adding that monetary and fiscal stimulus would boost GDP growth by 0.2 percentage points.

It is worth remembering that the BoK cut the interest rate by 25 basis points to a record low of 1.25 percent in June. And last month, the central bank revised down its GDP growth forecast for 2016 to 2.7 percent from 2.8 percent previously and the CPI inflation forecast to 1.1 percent from 1.2 percent previously.

Meanwhile, The Korea Composite Stock Price Index (KOSPI) ended 0.08 percent higher at 2,050.47 points.