BOK KEEPS KEY INTEREST RATE AFTER A YEAR

[Anchor Lead]

The Bank of Korea froze its base interest rate at 3.5% after being raised 7 consecutive times since last February. The BOK also downgraded its growth projection for the year, mentioning stagnate real estate market conditions and consumer spending.

[Pkg]

The base interest rate that had risen steadily since last February has finally come to a stop after a year. Starting at 1.25%, the interest rate was raised seven times in total, including two unprecedented spikes of 0.5%-point, to reach 3.5%. Bank of Korea Governor Rhee Chang-yong said that February's inflation rate to be announced early next month would remain high at around 5%, but expected it to be lowered to the 4% range for March figures. International oil prices, which had soared last March in the wake of Russia's invasion of Ukraine, have recently stabilized. The nation's central bank adjusted its inflation outlook to as low as a low-3% range by the end of this year. Consequently, all interest rates will be frozen while financial authorities assess other variables such as the currency exchange rates and public service charge increases.

[Soundbite] Rhee Chang-yong(Bank of Korea Governor) : "What would you do if you’re driving in thick fog? You should stop the car and wait until the fog lifts to decide whether to go on or not."

The BOK governor also said that the recent interest rate hikes caused the real estate market and spending to stagnate, undermining the overall economic conditions. Subsequently, the Bank of Korea was prompted to downgrade its growth projection for 2023 from 1.7% to 1.6%.

[Soundbite] Lee Hwan-seok(Bank of Korea Deputy Governor) : "The projection is driven by such factors as the slowdown of IT businesses and the struggling local real estate market."

However, the Korean economy is expected to improve gradually in the latter half of the year as China's economic activities would resume in earnest and Korean semiconductor business is likely to recover. President Yoon has convened an export strategy meeting to name officials in charge of export and investment in each ministry. The government will push ahead to boost Korea's export numbers initially projected to shrink this year.