South Korea’s central bank left its key interest rate unchanged Tuesday at a record low for a third straight month amid signs the country’s slumping economy is improving.
The Bank of Korea kept the benchmark seven-day repurchase rate at 2 percent at a regular monthly policy meeting. The central bank slashed the rate six times since early October, with one of the cuts coming at an emergency meeting.
South Korea’s export-driven economy, battered by declines in global consumer demand, has been grappling with its worst slowdown since the 1997-98 Asian financial crisis.
But the economy, Asia’s fourth largest, grew 0.1 percent in the first quarter amid signs government and central bank efforts to stimulate demand are working. The growth, though marginal, marked a turnaround from a contraction of 5.1 percent in the fourth quarter.
South Korea’s trade surplus hit a record high for the second straight month in April as imports fell sharply on cheaper costs for oil and as declines in exports eased, the government said earlier this month.
The bank’s policy committee said in a statement that South Korea’s economic slowdown has moderated as the pace of decline in exports has eased and the government and central bank have taken aggressive fiscal and monetary measures.
Still, the rate-setting committee was cautious about the outlook.
“The downside risk to economic growth is thought to persist because of the sustained worldwide economic slump and the deterioration of labour market conditions,” the statement said.
South Korea’s unemployment rate has steadily risen and hit 4 percent in March.