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Bank of Korea holds rates

July 13, 2018 12:00 AM
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SEOUL: South Korea´s central bank held its base rate steady on Thursday, as expected, but one board member´s dissenting vote may have raised the odds of a rate hike in coming months as major peers tighten monetary policy.

A downturn in South Korea´s labour market and feeble price growth have added to policymakers´ concerns over the extent of recovery in Asia´s fourth largest economy.

Governor Lee Ju-yeol told a news conference it was difficult to see Thursday´s sole dissenting vote as a signal for future rate hikes. But news of the dissenting vote sent September futures on three-year treasury bonds 0.19 points lower to 108.10 as of 0443 GMT, as many market participants saw it as forward guidance to the bank´s next move.

The yield on 3-year government bonds rose to 2.088 percent after closing on Wednesday at a 2018-low of 2.054 percent.

Lee Il-houng, a distinguished economist and Thursday´s sole dissenter on the seven-member board, voted to raise rates.

He similarly went against the majority at a meeting in October 2017 to vote for a rate rise, which was then promptly agreed in November - the BoK´s first hike in six years.

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