Korea: Central Bank leaves interest rates unchanged
December 9, 2010
At the monetary policy meeting on 9 December, the Bank of Korea (BoK) decided to leave the 7-day repurchase rate unchanged at 2.50%. In its statement, the Central Bank acknowledged the continued pick-up in domestic economic activity in recent months. While consumer prices have recently decreased due to the stability of food prices, the continued upswing in economic activity led to demand-pull price pressures. In addition, rising commodity prices, will likely push inflation higher in the months to come. However, the BoK acknowledged the presence of greater uncertainty in the global economic situation, as financial markets remain concerned about the creditworthiness of some members of the Eurozone. Moreover the recent confrontation between South and North Korea contributed to further uncertainty in financial markets, affecting in particular the South Korean won. Against this backdrop, the Bank of Korea decided to leave interest rates unchanged.
Author: Armando Ciccarelli, Head of Data Solutions