BoK maintains stable policy rate, in line with market expectations

Bank of Korea maintains the policy rates at 1.25 percent at the monetary policy meeting held Thursday, line with market expectations.

While trade growth remained lukewarm, South Korea’s growth for the first three-quarters of this year was decent at 2.9 percent from 2.6 percent in 2015. This was partly because of swift actions by the government and the central bank to counter the economic slowdown.

Looking ahead, it is believed that the risk for the economy is quite balanced; despite the political risks are rising after the impeachment on President Park, the external sector could see some improvement given the buyout US growth outlook, Commerzbank reported.

Meanwhile, the CPI inflation is likely to rise somewhat in the coming year, but will still stay below the central government target.

"All told, we think that the BoK will remain on hold next year, but KRW is likely to weaken given the broad USD strength," the report said.