Korea: Central Bank stays put in latest meeting
January 9, 2014
At its 9 January monetary policy meeting, the Bank of Korea (BoK) decided to keep the base rate on hold at 2.50%. This is the eighth consecutive meeting at which the Bank decided to maintain rates unchanged. The decision was in line with market expectations. The Central Bank stated that Korea's economic activity maintains its strong footing and that the growth trend remains positive. Nonetheless, the BoK acknowledged that a certain degree of slack in the economy will persist in the coming months, although the output gap is expected to narrow. Regarding price developments, the Central Bank stated that it expects inflation to start rising gradually, although it will remain low in the coming months mainly due to the stabilization of global commodity prices. The majority of Consensus Forecast panelists expect the Central Bank to raise the policy rate this year, with an average forecast of 2.72%. For 2015, panelists see the policy rate ending the year at 3.22%.
Author: Ricardo Aceves, Senior Economist