Bank of Korea Keeps 2.75% Interest Rate

November 9, 2012

Having cut the seven-day repo rate by 25 basis points in October, it wasn’t a big surprise to see the Bank of Korea not change the rate at its November policy meeting.  But a rather dovish statement released today calls Korean growth “still weak” and predicts that a negative output gap will “persist for considerable time.”  Inflation lies near the bottom of a 2-4% target band.  The statement also notes that Korean share prices have dropped substantially and that won strength has been sustained.  Officials again express concern about Euroland’s fiscal crisis but did not comment on the U.S. fiscal cliff.

The repo rate was also reduced by 25 bps in July.  From June 2010 and a low of 2.0%, the rate had been hiked five times, the last coming one year later in June 2011.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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