Overnight Rate Unchanged; Price Fears Trigger Caution

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Overnight Rate Unchanged; Price Fears Trigger Caution


The nation's central bank will keep the overnight call rate at the current level of 5 percent, the Monetary Policy Committee said after a meeting Thursday.

Bank of Korea Governor Chon Chul-hwan said, "In January, industrial production increased slightly and exports are showing signs of recovery. But consumer prices rose in the first two months of the year, so we decided to leave rates unchanged."

"The country is still experiencing some economic weakness, but its overall business climate for companies seems to be improving," Mr. Chon added.

The governor said that a big surge Wednesday in the benchmark three-year state bond rate was largely attributable to financial institutions, who are cautious about buying them after yields dropped sharply in February. "Expectations that the economy will recover and an increased supply of bonds by the Korea Deposit Insurance Corp. triggered the rate rise," the central bank governor said.

"But financial instituitions will buy them again when they see low demand for money from corporate customers."

The three-year state bond yield was 6.3 percent Thursday, up 0.26 percentage points from Wednesday.





by Cheong Chul-gun / Oh Jung-hee

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