neutral interest rate-estimate
S. Korea's neutral interest rate estimated at -0.2-1.3 pct: BOK report
SEOUL, Nov. 3 (Yonhap) -- The neutral interest rate in South Korea is estimated at between -0.2 percent and 1.3 percent in the first quarter of the year, a report from the Bank of Korea (BOK) said Sunday.
The report said the country's neutral interest rate has been on the decline since 2000 but rebounded slightly after the coronavirus pandemic.
More specifically, the neutral interest rate in Asia's fourth-largest economy was estimated at between 1.4 percent and 3.1 percent in the first quarter of 2000, but fell to between -1.1 percent and 0.5 percent in the first three months of 2020, according to the report.
The neutral interest rate, also dubbed natural interest rate, is usually known as the rate at which the economy is at full employment with stable inflation and a central bank's monetary policy stance is neither accommodative nor restrictive.
The BOK report said it is uncertain whether the rebound in the country's neutral interest rate will continue down the road.
"The direction of the country's neutral interest rate will be determined by various factors," it said adding that the aging population and productivity should be also reflected in the estimate.
Last month, South Korea's central bank slashed its key rate by a quarter percentage point to 3.25 percent, the first rate cut in 38 months, amid slackening domestic demand and moderating inflation.
(END)
(C) Yonhap News Agency. All Rights Reserved
