Bank of Korea

July 9, 2015

The latest policy meeting of South Korea’s Monetary Policy Committee ended with no further change in the seven-day record low 1.5% repo rate.  A 25-basis point cut of such in June had been the second reduction of 2015 and the seventh cut from a 3.25% peak since July 2012.  The South Korean economy continues to recover from the MERS shock that depressed confidence and curbed consumer spending.  Today’s statement warns of possible “heightened international financial market volatility due to the situation in Greece, changes in the monetary policies of major countries and the weakening of economic growth in emerging market countries.”  Korean growth is now expected to fall short of 3% in 2015, and inflation is projected to “continue at a low level” — that is below 1%.  In future policy guidance, officials plan to “monitor the trend of increase in household debt and external risk factors such as the situation in Greece and shifts in major countries’ monetary policies, as well as the trends of capital flows.”

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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