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Korea keeps base rate unchanged at 2%; core inflation falls to 1.8%
By Jennifer Chiou
New York, Nov. 13 – The Bank of Korea’s Monetary Policy committee decided to leave the base interest rate at 2% at its meeting on Wednesday. The rate was cut from 2¼% in October.
According to a bank policy statement, the committee said that although the trend of economic recovery in the United States has been sustained, the sluggishness of economic activities in the euro area has continued while trends of economic growth in emerging market countries have differed from country to country.
The committee forecasts that the global economy will sustain its modest recovery going forward, centering around the United States, but judges that the possibility exists of its being affected by changes in the monetary policies of major countries, by the prolongation of economic sluggishness in the euro area, by the weakening of economic growth in some emerging market countries and by geopolitical risks, the statement noted.
In Korea, the bank committee said that exports have sustained a favorable pattern, indicators of domestic demand have been alternating between improvements and worsening, and economic agents’ sentiments have been sluggish.
Consumer price inflation rose to 1.2% from 1.1% in October due mainly to a narrowing of the extent of decline in agricultural product prices.
Core inflation excluding agricultural and petroleum product prices fell to 1.8%, from 1.9% in September, owing primarily to slowdowns in the rates of industrial product price increase, the bank said.
The committee forecasts that, after remaining low for the time being, inflation will gradually rise next year. In the housing market, sales and leasehold deposit prices in both Seoul and its surrounding areas and in the rest of the country continued their upward trends, the release added.
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