Bank of Korea Leaves Policy Rate Unchanged

April 12, 2018

After its monthly policy review, South Korean central bank policy board released at statement that leads with a discussion of geopolitical risks.

The global financial markets have shown high levels of volatility, with government bond yields and stock prices falling in line mainly with concerns about the worsening trade relations between the US and China. Looking ahead the Board sees global economic growth as likely to be affected by factors such as the movements toward spreading trade protectionism, the paces of monetary policy
normalization in major countries, and the directions of the US government’s economic policies.

Officials had raised their base rate by 25 basis points last November to 1.50%. It was the first increase since 2011. Their latest statement observes that continuing solid growth in the domestic economy remains the baseline scenario, and note is also made that total and core CPI inflation should hover in the low to mid 1% range “for some time” before moving toward target later this year. With domestic inflationary pressure contained and in light of the aforementioned geopolitical risks, they opted to keep an accommodative stance that lends support to domestic growth.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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