New | Bank of Korea keeps rates steady for second month running

The Bank of Korea held interest rates steady at a record low for a second consecutive month on Friday, while upbeat remarks by Governor Lee Ju-yeol pared the chances of another rate cut soon - sending bond yields and the won higher.

Asia’s fourth-largest economy was recovering steadily at the pace seen in April, but sentiment among economic players clearly showed improving signs, Governor Lee said.

The Bank of Korea’s monetary policy committee kept the base rate at 1.75 per cent in a 6-1 vote, he said, without identifying the dissenting member who voted to cut the rate.

There was also one dissenting vote to cut when the committee held the rate steady in April after a reduction in March.

"According to sentiment surveys and the data we have at hand, there are positive signs for sure," Lee told reporters, while emphasising that household debt had been growing fast and deserved to be kept under a close watch.

The benchmark 10-year treasury bond yield rose 0.9 basis point to 2.507 per cent while the won gained 0.3 percent to 1,087.1 per dollar.

All but four of the 34 analysts surveyed by Reuters late on Tuesday forecast the Bank of Korea would leave its base rate unchanged at 1.75 per cent at Friday’s meeting.