The decision comes as the US Federal Reserve is poised to make its first interest rate increase in almost a decade, while monetary policy in Europe is moving in completely the opposite direction.
Advertisement
Jessica Hinds, a European economist at Capital Economics, said she still think that further interest rate rises will be needed in 2016.
None of the economists polled expect a recession any time soon, despite the fact the US economy is at a more mature stage of the economic cycle, with initial weekly jobless claims and the unemployment rate both at very low levels.
The Central Bank of Brazil kept its key interest rate on hold for the third consecutive meeting at 14.25% last month, the highest in nine years, as policymakers struggle to curb rising inflation amid economic contraction.
“Monetary Policy Board reached a consensus on a rate freeze, with signs of ailing domestic demand, expectations of a USA rate hike and other related global uncertainties”, Lee said in a press briefing at the bank’s headquarters in central Seoul.
Mr Cox added: “The market is now expecting a hike in the middle of next year, but this wouldn’t be the first time savers have seen their hopes of higher interest rates dashed”.
Consumer Price Index (CPI) inflation stayed at -0.1% for October, which is over 2% below the medium term (2-3year) target for inflation. “The price of oil had fallen markedly again, increasing the likelihood that headline inflation rates would remain subdued, and nominal wage growth had levelled off”, said the minutes.
Following the release the pound to dollar exchange rate conversion slipped to 1.5154 confirming markets have read today’s event as having done little to close the policy gap between the USA and UK.
BoE Governor Mark Carney has previously said that the decision on when to raise rates was likely to come into “sharper relief” around the turn of the year.
The Board forecasts that the global economy will maintain its recovery going forward, albeit at a moderate pace, centering around advanced economies such as the US, but judges that the possibilities exist of its being affected by heightened worldwide financial market volatility due for example to a shift in the US Federal Reserve’s monetary policy, and by the weakening of economic growth in emerging market countries.
The state-run Korea Development Institute (KDI) lowered its 2016 growth forecast from 3.1 percent to 3.0 percent, while downgrading this year’s growth outlook from 3.0 percent to 2.6 percent.
As for the timing of a hike: many economists see it later next year.
Advertisement
He said in December the central bank could fine-tune its “self-financing program”, which aims at channeling commercial banks’ funds into government debt from central bank deposit facilities and may even launch new unconventional tools later if needed.
