As widely expected, South Korea's central bank today decided to freeze its key rate for the month of August.<br />Kim Hyesung reports.<br />The Bank of Korea on Friday kept its benchmark interest rate unchanged at 1-point-five percent .<br />This comes after the bank cut rates by a quarter of a percentage point last month citing a slowing economy, in what was its first cut in three years.<br />Growing uncertainties over the on-going U.S.-China trade dispute and Japan's export restrictions on South Korea have put pressure on the bank to cut rates, but a back-to-back rate cut might signal that the economy is in crisis, prompting the bank to keep rates steady for August.<br />The last consecutive cuts occurred during the global financial crisis.<br />Also, the South Korean won has weakened by over 8 percent against the U.S. dollar this year to more than 12-hundred won against the greenback, so cutting rates too soon could knock the won even lower, creating capital flight risks.<br />But a rate cut is expected in October or November this year as data shows the domestic economy remains sluggish.<br />Exports, a key driver of South Korea's economic growth, are set for a contraction for the ninth consecutive month on weak global demand.<br />For the first 20 days in August, exports tumbled 13 percent on-year to less than 25 billion dollars with chip sector shipments plunging 30 percent.<br />Consumer sentiment is at a 31-month low this month, and headline inflation remained below one percent through July, lower than the bank's two percent target.<br />Kim Hyesung, Arirang News.<br />
