Korea holds pat on rates, cites benign inflation

MarketWatch.com - MarketPulse LOS ANGELES (MarketWatch) -- The Bank of Korea held its policy interest rate steady at 2.5% Thursday, as widely expected, citing contained inflation and continued economic recovery. The committee forecasts that inflation will gradually rise, although it will remain low for the time being due largely to the stability of international commodity prices, the central bank said in a statement following the decision. It said that while South Korea s domestic demand had slumped temporarily, exports were improving and the recovery remained in line with the trend of growth. The central bank hasn t changed the benchmark rate since May of last year. A poll of economists by The Wall Street Journal had eight respondents predicting no change to policy this year, while two forecast a cut in rates and seven predicted a rate hike in the second half of the year. The South Korean won showed little reaction to the move, with the dollar remaining around 1,063 won.Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.