April 12, 2018 / 2:33 AM / 6 months ago

HIGHLIGHTS-Bank of Korea Governor Lee's comments at news conference

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SEOUL, April 12 (Reuters) - South Korea’s central bank held interest rates steady on Thursday, as expected, with inflation running more slowly than forecast and exports showing a modest improvement.

Following are key remarks from Bank of Korea Governor Lee Ju-yeol’s news conference, translated by Reuters:

RATE DECISION:

“Today’s decision to keep the base rate at 1.50 percent was unanimous.”

“We kept the base rate unchanged today due to high uncertainties persisting in South Korea’s growth path due to trade-related conflicts between the United States and China, as well as monetary policy normalisation in key countries.”

“Regarding this conflict between the United States and China, hopes are high it will not develop into a worst-case scenario but it will be difficult to wait for the conflict to subside as political interests may become involved in negotiations.”

“We don’t see the trade conflict (between the United States and China) spreading, but it is also uncertain it will subside promptly.”

“Also, we noted demand-side price pressures in South Korea are not large which also contributed to our decision today.”

LOCAL ECONOMY, INFLATION:

“For this year, the Bank of Korea still sees economic growth at 3.0 percent, unchanged from our forecast in January.”

“As for inflation, this year we see inflation standing at 1.6 percent, a tad lower than 1.7 percent seen earlier.”

“(On effects from China’s retaliatory measures over South Korea’s deployment of a U.S. anti-missile system) It’s difficult to come to a quick conclusion on this yet, but we have been seeing more Chinese visitors to South Korea recently.”

“Inflation next year is expected to remain at a similar level to this year.”

“We lowered our inflation expectation for this year to reflect the slightly lower-than-expected performance of the economy in the first quarter.”

HOUSEHOLD DEBT:

“It’s still a bit early to say precisely what the effects of the November rate hike were as it has only been five months.

“However, we did see household debt growth become suppressed to some extent after the rate hike.”

“There was a considerable bump in household debt growth in March but this was partly due to temporary factors so we’ll have to keep watching, but I believe household debt growth will continue slowing.”

CURRENCY:

“Foreign exchange authorities have maintained their stance that the market decides exchange rates.

“Of course, if the won strengthens it could dull inflation through import price deflation and that could lessen room for future rate hikes.” (Reporting by Christine Kim Editing by Eric Meijer)

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