SEOUL, Nov. 27 (Xinhua) -- South Korea's central bank on Thursday froze its policy rate for the fourth straight time amid lingering uncertainties such as an increased exchange rate volatility and massive household debts.
Bank of Korea (BOK) Governor Rhee Chang-yong and other monetary policymakers decided to leave the benchmark seven-day repurchase rate unchanged at 2.50 percent.
It was in line with market expectations. According to the Korea Financial Investment Association's poll of 100 fixed-income experts, 96 percent predicted the rate on hold this month.
The central bank made the rate freeze decision in July, August, October and November after reducing the key rate by 25 basis points in February and May this year and in October and November last year.
The consecutive rate freeze was attributable to the broadened exchange rate fluctuations and the massive household debts.
The South Korean won versus U.S. dollar exchange rate increased to 1,424.4 won per dollar at the end of October from 1,402.9 won a month earlier.
The exchange rate hit 1,476.0 won during the daytime trading session on Nov. 21, marking the highest since April 9 when it touched an intra-day high of 1,487.6 won amid rising concerns about U.S. tariff hikes.
The U.S. Federal Reserve cut its target range for the federal funds rate by a quarter percentage point to 3.75-4.00 percent in October, narrowing the rate difference with South Korea to 1.50 percentage points.
If the BOK lowers its policy rate further amid the persistently wide interest rate gap with the United States, it could trigger a sharp rise in the exchange rate.
Debt owed by households to deposit-taking banks totaled 1,173.7 trillion won (800.0 billion U.S. dollars) at the end of October, up 3.5 trillion won (2.4 billion dollars) from a month earlier.
It continued to grow for the ninth successive month since February on robust demand for mortgage loan.
The domestic real estate market fluctuated in recent months, with the number of apartment transactions across the country reaching 45,000 in May, 35,000 in July and 47,000 in September each.
The new government of President Lee Jae Myung, who took office in early June, unveiled a set of measures to curb housing price increases, but demand remained to purchase new homes with borrowed money especially in Seoul.
Pressure eased on the central bank to lower rates further thanks to a boom in semiconductor exports and a recovery in consumer sentiment.
The BOK said in a statement that the economy continued its improvement trend, supported by a sustained recovery in consumption and by continued export growth.
Export, which accounts for about half of the export-driven economy, expanded 3.6 percent in October from a year earlier amid fewer working days, caused by the Chuseok holidays, the South Korean version of Thanksgiving Day.
The daily average export jumped 14.0 percent to reach an all-time monthly high of 2.98 billion dollars last month on the back of surging chip demand.
The composite consumer sentiment index (CCSI), which gauges the sentiment of consumers over economic situation, rose 2.6 points over the month to 112.4 in November, recording the first rebound in three months.
It marked the highest in eight years since November 2017 when the index recorded 113.9.
Inflation expectations, which measure the outlook among consumers over headline inflation for the next 12 months, stood unchanged at 2.6 percent in November compared to the previous month. ■
