* BOK raises 2020 GDP outlook to 3.0% vs 2.8% before
* BOK sees 2021 inflation at 1.0%
* Governor Lee says export growth to offset virus fallout
SEOUL, Nov 26 (Reuters) - South Korea's central bank kept
its key policy rate steady for a fourth straight meeting on
Thursday and sounded upbeat on the economic outlook even as the
country faced a third wave of coronavirus infections.
The Bank of Korea's (BOK) unanimous decision to keep its
base rate at a record low of 0.5%, as widely
expected, comes as policymakers also worry further easing could
add fuel to a red-hot property market.
The central bank slightly raised its gross domestic product
(GDP) forecasts for this year and next, but said monetary policy
would remain accommodative as the economic outlook remained
Governor Lee Ju-yeol said export volumes however had
recovered to pre-pandemic levels and would help lead the
economic rebound from a "low-point" in the second quarter.
"The worst situation seems to be over," Lee told a virtual
news conference. "The negative impact from the resurgence of the
coronavirus is still big, but we expect export growth to be
better-than-expected and to offset that."
The BOK expects gross domestic product to shrink 1.1% this
year from a previous forecast for a 1.3% contraction and sees
GDP growing 3% in 2021, up from 2.8% previously.
Local markets showed muted reaction after the central bank
kept its policy rate steady on Thursday.
Asia's fourth-largest economy returned to growth in the
third quarter after its sharpest contraction in more than a
decade, helped by fiscal and monetary stimulus.
Preliminary exports data showed global demand for South
Korean products rebounded in November, while industrial output
saw its sharpest year-on-year growth in seven months in
But a third wave of infections prompted the government to
tighten social distancing rules this week, threatening the
budding recovery. South Korea reported 583 new coronavirus cases
on Thursday, the highest since March.
Governor Lee said the BOK was monitoring recent gains in the
won, which could make exports more expensive and less
competitive. He also said growing household debt was a concern,
limiting the scope for further monetary easing.
Koo Hye-young, an analyst at Mirae Asset Daewoo Securities,
expected rates to stay on hold through the end of 2022.
"Lee reiterating concerns about household debt sounded like
he will be in wait-and-see mode," Koo said. "It also looks like
Lee doesn't expect the resurgence of the virus to lead to a kind
of sharp downturn in consumption we saw back in the second
The government has pledged 310 trillion won ($280.44
billion) in fiscal spending to help cushion the blow from the
pandemic, while the central bank has cut rates by a total of 75
basis points this year.
($1 = 1,105.4000 won)
(Reporting by Cynthia Kim; Editing by Ana Nicolaci da Costa)