Bank of Korea

July 18, 2019

The Bank of Korea’s 7-day repo rate was sliced to 1.50% from 1.75% in a move that surprised some analysts and which was ascribed to mounting trade tensions, easing monetary policies in other economies, and geopolitical risks. In taking this step, monetary authorities revised projected GDP growth this year slightly downward from 2.5% to something closer to 2.0% and also cut projected CPI inflation  in South Korea. Such is expected to stay under 1% for some time. All in all according to a released statement, officials said that “as it is expected that domestic economic growth will be moderate and it is forecast that inflationary pressures on the demand side will remain at a low level, the Board will maintain its accommodative monetary policy stance. In this process it will carefully monitor developments such as the US-China trade dispute, Japan’s export restrictions, any changes in the economies and monetary policies of major countries, the trend of increase in household debt, and geopolitical risks, while examining their effects
on domestic growth and inflation.”

Korea’s central bank rate previously had been raised by 25 basis points in November 2017 and one year later. Five 25-basis point cuts were previously engineered between March 2014 and June 2016.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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