South Korea's central bank on Friday froze its benchmark interest rate at an all-time low of 1.25 percent.
The Bank of Korea (BOK) refrained from altering the seven-day repurchase rate for seven months in a row since it cut the rate by a quarter percentage point in June last year. It was in line with market expectations.
According to a Korea Financial Investment Association (KFIA) poll of 200 fixed-income experts, 100 percent predicted the rate freeze in the first month of this year.
Pressures are running high on the BOK to raise its record-low policy rate as the U.S. Federal Reserve hiked rates by a quarter percentage point in December and indicated three rate increases in 2017.
Higher interest rates in the U.S. may trigger foreign capital exodus from the South Korean financial market as foreigners could go out for higher-yield assets outside South Korea.
At home, household debts continued a record-breaking trend, discouraging the BOK from lowering its borrowing costs further. The policy rate declined from 3.25 percent in July 2014 to the current 1.25 percent in June last year. Helped by the government's easing of regulations on mortgage financing, the household debts reached almost 1,300 trillion won (1.1 trillion U.S. dollars) that restricted private consumption on growing debt-serving burden.
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