Bank of Korea Keeps 2.5% Seven-Day Repo Rate

March 13, 2014

No interest rate change was made at the last monthly policy meeting presided over by the outgoing Bank of Korea governor.  The benchmark rate has been 2.5% since a 25-basis point cut in May, which was the third such move since July 2012.  Previously the rate was raised from 2.0% before June 2010 to 3.25% by mid-2011.  A statement released today by the Bank of Korea speaks about a negative domestic output gap narrowing gradually and inflation remaining below target for the time being due in part to low food price pressures.  Consumer prices rose 1.0% in the year to February, still below the 1.5-3.5% target range. Real GDP rose 3.7% in the year to 4Q13, but domestic demand has been sluggish.  Policy continues to be guided primarily by the inflation mandate, but officials also “paying close attention to developments in and the influences of external risk factors such as shifts in major countries’ monetary policies and geopolitical risk in Eastern Europe.” 

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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