Bank of Korea: No Change

November 13, 2014

South Korea’s seven-day repo rate had been cut by 25 basis points in October, the fourth such reduction since November 2012 and the second of 2014.  October’s vote had included one dissent, objecting to any policy change, but this month’s decision to leave the policy interest rate at 2.0% was made unanimously. A statement released today includes a mix of factors that collectively signal no urgency to modify the repo rate level further in the near term.  Exports are proving resilient despite the significant depreciation of the Japanese yen, but domestic demand continues to lag.  At the prior meeting, monetary officials concluded that unused productive resources are being reabsorbed more slowly than expected previously and consequently predicted that emerging price pressures would likely evolve more weakly than thought.  In the year to October, consumer prices rose 1.2%, and core inflation slowed a tick to 1.8%.  The statement mentions a recent decline in long-term interest rates.

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



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