South Korea's central bank is forecast to keep its benchmark interest rate unchanged this month following a surprise rate cut in March that sent the policy rate to a record low of 1.75%, analysts said Monday.
The respondents said that while room for another rate cut lingers, the BOK is likely to take a wait-and-see stance this month to gauge the impact of previous rate cuts and the speed of household debt growth that continues to surge amid a low-rate trend.
The central bank has faced growing pressure on further loosening its 2% base rate that has remained unchanged since October amid a series of global easing moves aimed at shoring up sluggish growth, according to South Korea's (Yonhap) News Agency.
Some analysts cited growing household debt as a key factor that will restrain the central bank from implementing a back-to-back rate cut in April.
South Korea's already bulky household debt has been sharply rising in tandem with two rate cuts in the second half of last year that prompted home buyers to cash in on the low interest rate.
Household loans in South Korea, Asia's fourth-largest economy, totaled 1,089 trillion won as of end-December, with mortgage loans accounting for 42% of the total. In February, household loan growth at local banks more than doubled from a year earlier.
The BOK, which updates its growth and inflation forecast every three months, is expected to revise down an earlier forecast made in January when it slashed its growth forecast to 3.4% from 3.8% and inflation forecast to 1.9% from 2.4%.