Bank of Korea

September 12, 2014

Officials at the Bank of Korea left their 2.25% repo rate at 2.25%.  This decision had been expected, the the rate level constitutes a multi-year low.  But whereas before, many analysts believed the downtrend had run its course after a 25-basis point cut in August (there were also cuts in November 2012 and May 2013), new speculation of a fourth rate cut has arisen because of a dissent this month favoring a cut now and in response to language in today’s statement.  The statement “expects that the negative output gap in the domestic economy will gradually narrow going forward, although its pace of narrowing will be moderate.”    Officials “forecast that inflation will gradually rise, but judges that for the time being inflationary pressures will not be high.”  Meanwhile, economic growth last quarter was the weakest in seven quarters.

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



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