S. Korea leaves interest rate unchanged at 2%

SOUTH Korea’s central bank on Thursday kept its benchmark interest rate on hold at a record-equalling low of 2.0 percent for the third straight month.

The move was widely expected, although some analysts had predicted a further 0.25 percentage point cut to boost tepid domestic consumption and ease deflation concerns stemming from low oil prices.

The plunge in oil prices saw South Korean inflation hit 0.8 percent in December, the lowest rate for 15 years and way below the Bank of Korea (BOK) target range of 2.5 to 3.5 percent.

The bank was to release new forecasts for growth and inflation later Thursday.

BOK Governor Lee Ju-Yeol acknowledged last month that the bank would struggle to hold to its forecast of 3.9 percent economic growth in 2015, citing Europe’s economic struggles and a “palpable” slowdown in China.