Korea: Central Bank keeps rates unchanged in June
June 13, 2013
At its 13 June monetary policy meeting, the Bank of Korea (BoK) kept the Base Rate unchanged at 2.50%, in a move that was widely expected by the market. The decision follows the 25 basis-point cut seen in May.
In the accompanying statement, the Bank highlighted that it expects the modest global recovery to be sustained but noted that the sluggishness of economic activity in the Eurozone and the implementation of fiscal consolidation in major countries still pose a risk to growth.
Domestically, monetary authorities acknowledged that economic growth continues, although weakly. Exports and construction investments have improved, despite the Japanese quantitative easing policy. Going forward, the Central Bank expects the economy to grow below potential due to the weak global recovery. Regarding price developments, the Bank expects inflation to remain relatively low, provided there is no occurrence of exceptional factors on the supply side such as oil price shocks or shifts in the price of agricultural products.
For 2013, panellists expect the monetary policy rate to end the year at 2.67%. For 2014, the panel expects the policy rate to end the year at 3.15%.