Korea: Bank of Korea stays put for 13th consecutive meeting
June 12, 2014
At its 12 June monetary policy meeting, the Bank of Korea (BoK) left the base rate unchanged at 2.50%. This is the 13th consecutive meeting at which the BoK refrained from raising the main monetary policy rate. The decision was on par with market expectations.
In the accompanying statement, the Central Bank pointed out that that the recovery in the global economy continues to be modest and is mainly sustained by developed economies. Domestically, the Bank recognized that economic growth has recently been sustained by buoyant exports, while growth in domestic demand is showing signs of deceleration, mainly due to the negative impact of the Sewol ferry accident. The Bank said that employment growth continues to be supported primarily by a higher number of workers in services as well as gains in the labor market among workers aged 50 and over. Regarding price developments, the BoK expects that inflation will be slightly higher by the end of the year, although it will stay low for the time being.
The Central Bank concluded that it would continue paying attention to, “external risk factors such a shifts in major countries’ monetary policies, and closely monitoring the movements in domestic demand following the Sewol ferry accident,” while adding that it would, “conduct monetary policy so as to keep consumer price inflation within the inflation target range over a medium-term horizon while supporting the continued recovery of economic growth.”
Author: Ricardo Aceves, Senior Economist