Bank of Korea keeps base rate at 3¼%; consumer price inflation tops 4%

By Angela McDaniels

Tacoma, Wash., Jan. 13 - The Bank of Korea's Monetary Policy Committee again decided to leave its base interest rate unchanged at 3¼%, according to a bank policy statement.

The bank has maintained its base interest rate at 3¼% since July.

Consumer price inflation exceeded 4% in December, driven by the prices of oil products and processed food.

The committee expects factors including the base effect from 2011 and the easing of demand-side pressures to work in favor of price stability, but it also expects the pace of decline in the inflation rate to be moderate.

Going forward, the committee believes the pace of global economic recovery will be very moderate and judges that the downside risks to growth are becoming larger, due mostly to the sovereign debt crisis in Europe and to the possibilities of slumps in major economies and the unrest in international financial markets continuing.

In Korea, the committee expects that domestic economic growth will remain subdued for some time, due mostly to the impact of external risk factors, before gradually returning to its long-term trend.

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