S. Korea freezes interest rates at record low for 6 months

In the minutes of its meeting this month, the Monetary Policy Committee (MPC) weighed “robust growth” in domestic spending against weak overseas demand, and said eight of the nine panel members voted to leave the benchmark at 0.5 per cent this month.

NZ Forex expects the central bank “could sit on its hands this week and do nothing for another month”, although any gain in the kiwi would be capped by the prospects of a Fed rate hike, he said.

The news comes as the US Federal Reserve is poised to deliver next week its first interest rate hike in nearly a decade, while eurozone monetary policy is moving in the opposite direction.

Sterling slipped against the dollar after markets reacted negatively to the latest set of minutes from the Bank of England released on Thursday.

“Furthermore, the BoE clearly seems to have no appetite to indicate a policy before the US Federal Reserve’s decisive meeting next week”.

Bank of England governor Mark Carney has already said a decision to raise rates in the USA is “not decisive” for United Kingdom policymakers, stressing any such move on these shores will be made according to United Kingdom economic conditions.

Ian McCafferty, one of four external members of the MPC, was the only one to vote for a rate rise.

The outlook for inflation reflects the balance between persistent drags from factors such as sterling and world export prices and prospective further increases in domestic cost growth. However the markets were generally disappointed by lack of more stimulus measures as they had hoped for deeper rate cuts and more monthly bond purchases.

The BoE is expected to hold the UK Official Bank Rate at 0.50 percent.

The Dow Jones Industrial Average lost 117.12 points or 0.66 percent to 17,730.51, the Nasdaq was down 40.46 points or 0.79 percent to 5,101.81 and the S&P 500 dropped 14.62 points or 0.70 percent to 2,077.07.

“To be sure, moving now appears more about getting the first hike out of the way and changing the conversation away from liftoff to the shallow path of hikes expected thereafter than it is about the current state of the economy demanding tighter policy”, Ellen Zentner, economist at Morgan Stanley, wrote in a note.

New Zealand’s S&P/NZX 10 index fell 0.4% after the country’s central bank cut rates for the fourth time this year.

Against the euro, the pound edged down 0.1 percent to 72.26 pence.

The BCC believes rates will rise in the third quarter of 2016, although it stresses that global economic woes could push it back further, while Investec Economists are pencilling in a rise in the second quarter of next year.