Bank of Korea

May 25, 2017

South Korea’s central bank base rate was again left at 1.25%. It’s been at that level since a 25-basis point cut in June 2016. Previously a pair of such reductions were each implemented in 2014 and 2015. A released statement after the May monthly policy review projects sub-target total core inflation in the mid- to upper 1% range and total CPI hovering near but just shy of 2%.  U.S. developments will exert important influence on future policy-making. The U.S. is involved either uniquely or in conjunction with other economies in each item from a list of uncertainties that the statement mentions: “the directions of the US government’s economic policies, the pace of monetary policy normalization by the US Federal Reserve, the movements toward spreading trade protectionism, and political uncertainties in major countries.” Of course, South Korea is not without homegrown drama. Former President Park Geun-hye for three years became embroiled in a corruption scandal and was removed from office recently by impeachment. The Bank of Korea’s meeting today was the first since her permanent successor, President Moon Jai-in, assumed power. Monetary policy will also need to take account of any changes in fiscal policy and how domestic private debt evolves.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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