BOK keeps base interest rate at record low of 0.5%

Korea's central bank maintained the benchmark interest rate at a record low of 0.5 percent on Friday.

Bank of Korea Gov. Lee Ju-yeol, far left, conducts a monetary policy board meeting on Friday at the central bank in Jung District, central Seoul. During the meeting, the board decided to freeze the base interest rate at 0.5 percent. [BANK OF KOREA]

Korea's central bank maintained the benchmark interest rate at a record low of 0.5 percent on Friday.

With the coronavirus still challenging the economy, monetary easing was necessary, according to the bank.

The base rate has been kept at its record low since last May and inflation has remained low.

Last year, the monetary policy board of the Bank of Korea (BOK) lowered the base rates twice: in March to 0.75 percent and in May to 0.5 percent.

"Currently, available information suggests that the recovery of the global economy has weakened due to the resurgence of Covid-19," the BOK said in a statement Friday.

"Looking ahead, the board sees global economic growth and global financial markets as likely to be affected by the severity of the resurgence of Covid-19 and the status of vaccine distribution, as well as by national policy responses and their effects."

While low interest rates have led to surges in local stock prices, as retail investors take advantage of abundant liquidity, the BOK said it will continue to pay attention to financial stability, especially fund flows to asset markets and growth in household debt.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]