By Christine Kim and Cynthia Kim
SEOUL (Reuters) - South Korea's central bank kept interest rates unchanged for a seventh straight month on Friday, in line with expectations, as it braces for policy developments out of the United States under the presidency of Donald Trump.
The Bank of Korea's monetary policy committee held its base rate
All 23 analysts surveyed in a Reuters poll before the decision forecast the Bank of Korea would leave the base rate unchanged on Friday.
"The BOK is likely keeping observant, honing its focus on structural issues. And household debt may act as a restraint on consumption," said Lee Jae-hyung, a fixed-income analyst at Yuanta Securities Korea.
"I still see the bank standing pat for the rest of the year, but the economy could use a cut early on. It all depends on how the BOK perceives household debt, credit market risks and macro-economic policy."
Markets largely ignored the widely expected move.
South Korea's central bank finds itself in a tight spot regarding its monetary policy: Although economic growth is sluggish, household debt continues to mount even as the U.S. Federal Reserve readies further rate hikes.
Moreover, the country faces uncertainties from an influence-peddling scandal that has seen President Park Geun-hye impeached by parliament and on the brink of becoming the country's first democratically-elected president to be forced from office.
Central bank officials have said monetary policy will not be directly influenced by a new president, but the bank is preparing itself for changed macro-economic policies that could come with a new administration.
The bank is expected to publish revised economic forecasts for 2016 and 2017, plus new projections for 2018.
Although the revisions are expected to be minimal, the estimates are unlikely to be revised up because economic growth in the fourth quarter is widely seen to have slowed.
South Korea's economy expanded by 2.6 percent in the third quarter as handset exports lagged because Samsung Electronics (LON:0593xq) Co Ltd (KS:005930) had to scrap its fire-prone Galaxy Note 7 smartphone last year.