At the monetary policy meeting held on 10 June, the Bank of Korea (BoK) raised the BoK Base Rate by 25 basis points, from 3.00% to 3.25%, in a decision which once again defied market analysts' expectations. With the move, the Central Bank resumed the tightening cycle that began in July 2010, after holding rates steady for two consecutive meetings. The BoK has raised the policy rate five times in the last ten months, pushing the policy rate to its highest level since November 2008. In May, annual headline inflation inched down to 4.1% from 4.2% in April, marking a fifth consecutive month that inflation has sat above the BoK 3.0% 1.0 percentage point tolerance range. In addition, core inflation, which excludes volatile items as fresh food and energy, is now at its highest level in more than 18 months as, according to the accompanying statement to the BoK's decision, ?the effects of the recent rises in price of oil and farm products? are passed through to prices of processed foods and services. The BoK believes that inflationary pressures will remain in place going forward, thus providing a case for the tightening move. Market analysts believe that the BoK will continue raising rates in the coming months as the statement claimed that monetary policy will put a ?greater emphasis? on ensuring price stability.
Korea Monetary Policy
Central Bank unexpectedly hikes policy rate
June 10, 2011
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Korea Economic News
October 13, 2016
At its 13 October monetary policy meeting, the Bank of Korea (BoK) announced that it will hold the base rate constant at a record low of 1.25%, which was largely in line with market expectations.
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In September, consumer prices rose 0.6% over the previous month, which contrasted the 0.1% decrease in August and overshot the 0.2% increase the markets had expected.
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Korea’s Customs Services reported that exports totaled USD 40.9 billion in September, which represented a 5.9% contraction over the USD 43.4 billion recorded in the same month last year.
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The forward-looking business confidence indicator (BSI) for the manufacturing sector produced by the Bank of Korea (BoK) rose from 74 points in September to 75 points in October.