Published : 2013-01-03 09:17
Updated : 2013-01-03 09:17
Global investment banks (IBs) have mixed views over South Korea's monetary policy for this year amid a modest recovery forecast with stable inflation predicted for the economy, a report said Thursday.
Goldman Sachs expected the Bank of Korea (BOK) to keep its key interest rate steady throughout this year, citing a modest gain in consumer prices projected for 2013, according to the report by the Korea Center for International Finance.
The central bank cut the key rate twice last year by a quarter percentage point each to 2.75 percent, in a bid to boost growth amid the protracted global downturn and a slowing local economy.
Bank of America-Merrill Lynch also forecasted the rate will stay unchanged, given the current pace of recovery and stable inflation, the report said.
Korea's consumer price index eased to the slowest pace in four months in December, rising 1.4 percent on-year, which stood below the BOK's target range of 3 percent.
In contrast, some other IBs predicted the BOK will likely cut the key rate early this year.
Barclays said the BOK might lower the interest rate before March, although it largely agreed to the rate freeze outlook considering the recovery in exports.
Some market analysts here who bet there will be another rate cut in 2013 said the easing inflation will give the central bank more room to implement further monetary easing.
BNP Paribas projected a rate cut in January, as the BOK will likely need to stave off the impact on the Korean currency from its sudden rise against the quantitative easing in the U.S.
Meanwhile, the IBs gave a positive picture for the Korean stock market to trend upward at a moderate clip, though it may face volatility, according to the report. (Yonhap News)