S.Korean central bank expected to freeze key rate for September

South Korean central bank is expected to freeze its key interest rate for September amid concerns over an economic slowdown and inflationary pressure, South Korean economists said Monday.

A group of 17 economists from local financial institutions unanimously predicted that the Bank of Korea would maintain September's call rate at 4.5 percent when its policy makers meet on Thursday, the South Korean Yonhap News Agency said.

The call rate refers to the interest on overnight inter-bank loans. In August, the policy makers raised the rate by 0.25 percentage point to 4.5 percent, a five-year high, to rein in inflationary pressure from crude oil prices and growing domestic demand.

In July, South Korea's industrial output hit a 13-month low due to decrease in auto exports and flood damage.

South Korea's consumer prices have risen at a faster-than- expected rate of 2.9 percent in August, but temporary seasonal factors such as flood damages and soaring prices of farm produce were the main reason behind the surge, the experts said.

South Korean government said in August that its economic growth is expected to slow to 4.6 percent in mid-2007, down from an estimated 5.1 percent advance in 2006. The Standard & Poor's predict the economic growth of South Korea will slow to the 4 percent range in 2007.

Source: Xinhua