Korea: Central Bank maintains base rate unchanged
November 14, 2013
At its 14 November monetary policy meeting, the Bank of Korea (BoK) decided to keep the base rate unchanged at 2.50%. This is the sixth consecutive meeting in which the Bank decided to keep the rates on hold. The decision met market expectations.
According to the Bank, the economy has developed in line with the projected growth trend. However, BoK acknowledged that the output gap will remain negative in the coming months. Regarding price developments, the Committee stated that it expects inflation to remain at low levels for now, "primarily due to the inflation reducing effects of policies such as free childcare provision and to the downward stabilization of international agricultural prices."
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