Bank of Korea

May 9, 2014

The seven-day repo rate, which has been at 2.5% for the past 12 months, was again not changed after the latest policy meeting.  There had been some speculation that monetary policy normalization might start before the end of 2014, and a statement released today projects that Korea’s negative output gap will narrow gradually.  But officials are clearly not in a hurry to raise the policy interest rate for the first time since June 2011.  Won appreciation may eventually curb exports, which until now have been rather robust.  The latest statement also promises that officials intend “to be closely monitoring the movements in domestic demand following the Sewol ferry accident.”  The risk is that consumption and tourism may remain depressed in the wake of that tragedy.

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



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