Bank of Korea Gov. Rhee Chang-yong speaks in this Feb. 18 photo. Yonhap
The Korean central bank is widely expected to lower its policy rate by 0.25 percentage point next week in an effort to prop up the economy, a poll showed Friday.
According to a survey conducted by Yonhap Infomax, the financial news arm of Yonhap News Agency, 20 out of 21 local analysts and experts polled predicted the Bank of Korea (BOK) will cut its base rate to 2.75 percent from the current 3 percent at its next rate-setting meeting slated for Tuesday.
In January, the BOK kept its benchmark interest rate frozen in the wake of the weak local currency amid political chaos and uncertainties stemming from U.S. President Donald Trump's new administration.
The on-hold decision came on the heels of two rate cuts in the October and November meetings.
"The country is facing growing downside risks centering on weak domestic demand, while the won's further weakness seems limited, which would lead the BOK to lower the policy rate by 25 basis points," said Kim Seon-tae, an expert from KB Kookmin Bank.
Nineteen out of the 21 analysts polled anticipated the key rate to be lowered to 2.5 percent in the first half of this year.
The central bank is scheduled to present an adjusted growth forecast Tuesday. BOK Gov. Rhee Chang-yong has hinted at slashing the outlook to around 1.6 percent from its previous forecast of a 1.9 percent expansion.
Korea's potential growth rate is at 2 percent, and this year may mark the first time ever that the country's yearly growth rate falls below the level.
In a separate poll of 100 bond experts conducted by the Korea Financial Investment Association (KOFIA), 55 percent expected the BOK to slash the policy rate in the upcoming meeting, while 45 percent responded the central bank is projected to freeze the rate.
"Compared with our previous poll, more experts see chances of a rate cut, as domestic consumption and investment remain in the doldrums, putting greater downward pressure on the economy," the KOFIA said in a release. (Yonhap)