SEOUL: South Korea's central bank is widely expected to keep its key interest rate unchanged at its next policy meeting, a Reuters poll showed on Tuesday, with the country's economic recovery seen slowing and inflation remaining weak.
All 18 economists surveyed by Reuters expect the Bank of Korea (BOK) will hold its benchmark interest rate steady at 1.50 percent at its meeting on Thursday.
Analysts say the BOK is likely to be more careful about tightening again despite the widening gap between South Korean and US interest rates.
Consumer price inflation was below the central bank's 2 percent target in the first quarter, cementing a view that the BOK's monetary tightening will be gradual this year.
A majority of economists surveyed see the next rate hike likely coming in July, later than previous consensus forecasts of May.
"Economic recovery is somewhat slower than consensus, but if the growth rate remains at around three percent for the first-half with inflation edging up to mid-one percent range, there could be a hike in July," said Yoon Yeo-sam, a fixed income analyst at Meritz Securities, adding that additional increase seem less likely.
Economists also pointed to the strong possibility of the US Federal Reserve raising its benchmark interest rates in June, which could make a BOK rate hike in July more plausible.
Oh Chang-sob, a fixed analyst at Korea Investment and Securities, said that the central bank will have to consider monetary tightening if a Fed rate hike in June widens the gap between US and Korean rates.
The central bank raised the base rate by 25 basis points from a record-low of 1.25 percent in November, its first tightening in six years on signs growth in Asia's fourth-largest economy was picking up.
Since then, the BOK has suggested a gradual tightening in policy, saying that the bank is not obliged to follow a global withdrawal of stimulus measures.
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