BOK expected to hold key rate frozen in May

South Korea's central bank will likely hold its key rate steady this month, extending its wait-and-see mode amid what many observers have called mild signs of recovery, a poll showed Tuesday.

    In a poll conducted by Yonhap Infomax, the financial news arm of South Korea's (Yonhap) News Agency, 16 out of 18 economists surveyed forecast the Bank of Korea (BOK) to again hold its policy rate frozen at its monthly rate-setting meeting scheduled for Friday.

    The key rate currently stands at 1.5%. The central bank has stood pat on the key rate since June 2015 after sending it to the record low level through four rate reductions in less than a year. "It seems that growth is picking up mildly in the second quarter, thanks to the extension of fiscal stimulus and the resultant rebound in domestic demand. This should provide a source of comfort for policymakers and reduce the urgency to cut rates," an economist at DBS in Singapore Ma Tieying said. 

    Such an outlook follows what government officials, including Finance Minister Yoo Il-ho, have called still weak but clear signs of improvements in Asia's fourth-largest economy. South Korea's consumer prices have risen by more than 1% on-year for three consecutive months since February, while the rate of drop in exports slowed from the start of the year. 

    Some of the economists still noted a need to further reduce the key rate to assist economic growth here, but many insisted now was not the time.