* Base rate kept at 3.00 pct (Reuters poll: 2.75 pct
* Analysts expected at least one rate cut by year’s end
* Governor’s news conference due from 0220 GMT
SEOUL, Sept 13 (Reuters) – South Korea’s central bank
unexpectedly held interest rates steady on Thursday in order to
give it time to assess whether a euro-zone bond-buying programme
will help allay Europe’s financial crisis, although analysts
said it still had room to cut interest rates this year.
The Bank of Korea’s monetary policy committee held its base
rate steady at 3.00 percent, a media official said
without elaborating. Governor Kim Choong-soo is expected to hold
a news conference from 11:20 a.m. (0220 GMT).
Bond futures fell while the won pared early losses against
the dollar but the impact on markets as a whole was limited as
traders awaited more details on the decision and the future
policy from a news conference.
Treasury bond futures fall sharply after the
decision while the won turned higher against the dollar.
Stock prices showed a muted reaction.
Eighteen out of the 21 analysts polled by Reuters had
predicted a 25 basis-point cut. The central bank trimmed the
rate in July for the first time in more than three years and
then left it unchanged in August.
Most analysts had expected the central bank to cut the rate
once again, if not on Thursday then later, and then stay on hold
at least for the rest of the year while watching developments in
Europe and the effect of policy measures around the world.
Recently, most central banks have left their policy
untouched in recent weeks to assess developments in the euro
zone and the economic performance elsewhere, with the exception
of the Swedish and Brazilians who cut their rates.
South Korea’s export-reliant economy, the fourth-largest in
Asia, slowed to quarterly growth of 0.3 percent in the
April-June period from 0.9 percent in the previous three months
as capital investment collapsed.
The slump was deepening in the current quarter as combined
exports in July and August fell by 7.6 percent from a year
earlier and sales at top department and discount stores shrank
simultaneously year-on-year for the last three months in a row.
South Korea’s annual inflation slowed to a fresh 12-year low
of 1.2 percent in August, providing further evidence of cooling
domestic demand and allowing the central bank to cut interest
rates when it needs to spur domestic spending.
(Reporting by Christine Kim and Se Young Lee; Editing by
Choonsik Yoo)
