Bank of Korea Gov. Rhee Chang-yong bangs the gavel to open a Monetary Policy Committee meeting at the central bank in Seoul, May 23.  Yonhap

Korea’s central bank froze its key rate for the 11th straight session Thursday given still-high inflation and a faster-than-expected growth projection for the year.In a widely expected decision, the monetary policy board of the Bank of Korea (BOK) kept its policy rate unchanged at 3.5 percent.The BOK has continued to stand pat following rate freezes since February last year after delivering seven consecutive rate hikes from April 2022 to January 2023.The rate freeze took place as inflationary pressure in Asia’s fourth-largest economy still remains high, while the country’s economy is expected to grow faster than expected this year on the back of robust exports.The country continued to experience high inflationary pressure last year following the sharpest inflation in decades in 2022.Korea’s inflation rose 2.9 percent in April, marking the first time in three months that the index fell below 3 percent. But the reading is still higher than the central bank’s midterm inflation target of 2 percent.

In January, inflation fell below 3 percent for the first time since July 2023, but high prices of fruits, farm produce and energy have caused inflationary pressure to flare up again.Recently, global oil prices have been high, and inflation in the United States has remained high as well, prodding the central bank to remain cautious in cutting rates.The rate freeze also came as the central bank heightened its growth projection for the year.The central bank jacked up its growth estimate to 2.5 percent for the year, up from its earlier projection of 2.1 percent.Korea’s economy grew at a higher-than-expected rate of 1.3 percent in the first quarter of the year, aided by a continued recovery in exports and a rise in construction investment.The first-quarter expansion beat the market estimate of 0.6 percent and the 0.6 percent on-quarter expansion in the September-December period.

The reading marks the highest since the fourth quarter of 2021, when the economy expanded 1.4 percent.On a yearly basis, Korea’s economy advanced 3.4 percent in the first quarter, higher than the 2.2 percent growth for the last quarter of 2023.Last year, the economy expanded 1.4 percent, slowing from the previous year’s 2.6 percent gain and the 4.1 percent advance in 2021.The central bank is also paying keen attention to high household debts, which could further weaken feeble domestic demand.Household loans extended by banks in Korea rebounded in April, led by a rise in mortgage loan growth.Banks’ outstanding household loans increased 5.1 trillion won last month from a month earlier, a rebound from a 1.7 trillion-won fall the previous month.The central bank’s rate freeze followed the Federal Reserve’s decision earlier this month to hold its benchmark lending rate steady at between 5.25 percent and 5.50 percent 온라인카지노 for the sixth consecutive time.

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