Korea: Central Bank keeps still amid possible government stimulus
March 14, 2013
At its 14 March monetary policy meeting, the Bank of Korea (BoK) left the Base Rate unchanged at 2.75% for a fifth consecutive month, in a move in line with market expectations. Monetary authorities remain on hold as they await a likely stimulus package, which the new government is expected to unveil in the near future.
In the accompanying statement, the Bank highlighted that the fiscal crisis in the Euro Area and the fiscal consolidation in the United States pose a risk to growth. In addition, the Bank reiterated its view that economic growth in the Euro Area remains sluggish, while growth in emerging markets continues.
Domestically, the committee noted weak growth despite increasing construction investment and improving trend in exports. Regarding price developments, the Bank expects inflation to remain contained amid easing demand-side pressures.
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%.