BOK to hold base rate at 3.50 at Feb. 22 meeting

BENGALURU, Feb 20 Reuters The Bank of Korea will keep its key policy rate on hold for a ninth consecutive meeting on Feb. 22, according to all economists polled by Reuters, who stuck to their longheld view the first rate cut would come in the third quarter.

Despite inflation declining to a sixmonth low in January, most Bank of Korea board members see the need for monetary policy to stay restrictive for some time to bring it down to the bank39;s 2.0 target.

Although BOK Governor Rhee Changyong said any premature rate cuts could reignite inflation expectations, a cumulative 300 basis points of hikes between August 2021 and January 2023 could pose a significant threat to highly indebted households.

Still, the central bank will leave the base rate unchanged at 3.50 on Feb. 22, said all 38 economists in the Feb. 1319 poll.

As inflation is still above the BOK39;s 2 target and economic recovery is gaining momentum led by strong export growth, the BOK will not cut rates at this meeting, Nomura economist Jeong Woo Park said.

For the rest of the year, however, I expect rate cuts to start in July as I expect a fear of recession to rise again, he said. The worsening housing market downturn would remain headwinds against private consumption.

Median forecasts showed interest rates would stay on hold until the end of June, in line with many regional central banks, followed by 25 basispoint cuts in both the third and fourth…