Korea: Central Bank keeps rates unchanged in October
October 10, 2013
At its 10 October monetary policy meeting, the Bank of Korea (BoK) maintained the base rate unchanged at 2.50% for the fifth consecutive month. The decision was expected by the market.
According to the Central Bank's statement, economic activity continues to improve and is buttressed by healthy growth in exports and a strong labor market. The Central Bank noted that while the output gap would remain negative, "for a considerable time going forward," the Bank does expect it to narrow gradually over the coming months. Regarding price developments, the Bank expects inflation to remain low in the months to come despite an expected increase in some public utilities fees.
The majority of Consensus Forecast panelists expect the Central Bank to maintain the base rate unchanged this year, with an average forecast of 2.67%. For 2014, panelists see the policy rate ending the year at 3.15%.
Author: Ricardo Aceves, Senior Economist