Bank of Korea kept its base rate unchanged at 2.50% for the inter-meeting period amid high inflationary pressure and uncertainties surrounding developments in the Middle East, the central bank said in a Thursday release.
Five members of the Monetary Policy Board backed keeping the base rate steady, while Chang Yongsung and Ryoo Sangdai opposed, calling for a 0.25% rate hike to 2.75%.
The decision was in line with a poll conducted by Reuters, wherein 30 of 32 economists anticipated the rate freeze decision. A survey conducted by Bloomberg also witnessed 22 out of 23 economists agreeing on a steady rate decision.
Inflation pressures have risen due to the Middle East conflict, while stronger exports raised growth beyond earlier expectations, and financial stability risks remain.
Consumer inflation rose to 2.6% in April on the jump in petroleum prices, while core inflation remained unchanged at 2.2%, and inflation expectations remained in the upper 2% range.
The central bank expects inflationary pressure to build further amid higher oil prices and growing demand, raising inflation forecasts for this year to 2.7% for headline inflation and 2.4% for core inflation, both above its February projections.