SEOUL, Oct. 22 (Xinhua) -- South Korea's central bank froze its key rate on Thursday, pausing its monetary tightening cycle to evaluate the impact of back-to-back rate hikes in July and August.
Bank of Korea (BOK) Governor Shin Hyun-song and other monetary policymakers decided to leave the benchmark seven-day repurchase rate unchanged at 3.00 percent.
The unanimous decision was in line with market expectations. According to a Korea Financial Investment Association survey of 100 fixed-income experts, 93 percent predicted the rate on hold.
Shin told a press conference that the central bank needs to prolong its tightening cycle despite the pause, stating that the consecutive rate hikes in July and August gave the BOK policy room to maneuver according to domestic economic conditions.
Expectations ran high for the BOK to resume its rate-hiking path later this year or early next year amid the still high inflationary pressure and the continuous household debt growth.
The consumer price index (CPI) rose 2.9 percent in September from a year earlier, decelerating from an increase of 3.1 percent in August.
The headline inflation, however, stayed above the central bank's mid-term inflation target of 2 percent for 13 straight months.
Petroleum product prices jumped 14.8 percent last month amid the continued Middle East conflicts.
Despite slowing household loan growth, total debt kept an upward trajectory for a seventh consecutive month.
Debt owed by households to deposit-taking banks totaled 1,198.9 trillion won (906.1 billion U.S. dollars) at the end of September, up 0.6 trillion won from a month earlier.
It marked a significant slowdown from the 3.5 trillion won expansion in the previous month, affected by a slump in retail stock investments and a reduction in newly completed housing.
The BOK said in a statement that the domestic economy maintained strong growth led by exports and investment, but it cautioned that inflation remained high at around 3 percent.
The bank explained that housing-related loans continued to increase while the pace of growth in housing prices in Seoul and its surrounding areas accelerated again.
The overall South Korean economy showed a robust recovery thanks to soaring exports of semiconductors used in the artificial intelligence (AI) infrastructure.
Outbound shipments surged 83.5 percent in September from a year earlier, while the daily average exports more than doubled.
Revised gross domestic product (GDP) data showed that facility investment climbed 6.3 percent year-on-year in the second quarter.
After shrinking 0.1 percent in the fourth quarter of last year, real GDP rebounded 1.8 percent quarter-on-quarter in the first quarter of this year and beat expectations with a 0.6 percent expansion in the second quarter.
The current account surplus from January to August totaled 279.2 billion U.S. dollars, a more than fourfold expansion compared to the same period last year.
Backed by the strong fundamentals, the central bank raised its 2026 growth outlook from 2.6 percent to 3.3 percent in August. ■