Bank of Korea: Low Inflation, Low Central Bank Rate

September 12, 2013

Another unanimous vote was cast by the Monetary Policy Committee for an unchanged 2.5% seven-day repo rate.  A released statement reiterates the likelihood of “a negative output gap for a considerable time going forward” and projects “that inflation will remain low for the time being despite an increase in international oil prices.”  Moderate economic growth is expected to continue.  In contrast to the weakness of a number of emerging market currencies, the won continues to appreciate to a fault.

The statement doesn’t illuminate the timing or direction of the next rate change.  Such was raised five times during the year to June 2011, reaching 3.25% from 2.0%, but then cut three times by 25 basis points each in July and October of 2012 plus May of this year. 

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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