Bank Of Korea Maintains Lending Rate At 1.25%
January 12 2017 - 5:01PM
RTTF2
The Bank of Korea's monetary policy board on Thursday decided to
hold the nation's benchmark interest rate steady at the record low
1.25 percent for the seventh straight month.
That followed June's surprise rate cut by 25 basis points from
1.50 percent after 10 straight meetings without a move.
"The board judges that the global economic recovery will be
affected by factors such as the directions of the new U.S.
government's economic policies, the pace of monetary policy
normalization by the U.S. Federal Reserve, and the movements toward
spreading trade protectionism," the bank said in a statement
accompanying the decision.
Steady inflation allowed the bank the flexibility to hold fire
as consumer prices were steady at 1.3 percent on year for the third
straight month in December.
On a monthly basis, inflation eased 0.1 percent for the second
straight month.
Core CPI was up 1.4 percent on year, up from 0.7 percent in the
previous month. Prices also were down 0.1 percent on month after
rising 0.2 a month earlier.
Export prices were up 2.9 percent on month in December following
the 3.8 percent increase in November. On a yearly basis, export
prices gained 6.3 percent after climbing 3.5 percent in the
previous month.
Import prices were up 4.2 percent on month after adding 2.4
percent in November. Import prices also jumped 9.2 percent on year
after gaining 3.6 percent a month earlier.
"The board forecasts that consumer price inflation will
gradually rise to near the 2 percent target level by around the
middle of 2017, on the effects mainly of the increases in
international oil prices, and that core inflation will maintain a
level in the mid- to upper-1 percent range," the bank said.
Much of the other economic data was soft enough to keep the bank
from exercising any kind of move.
The South Korean government recently lowered its growth forecast
for next year, citing weaker overseas concerns and weaker domestic
consumption.
The growth forecast for next year was lowered to 2.6 percent
from 3.0 percent announced in June, the finance ministry said.
The downward revision was mainly due to the outlook for a
slowdown in domestic demand amid the political scandal that led to
President Park Geun-hye's impeachment.
"The board will maintain its stance of monetary policy
accommodation. In this process it will closely monitor the
uncertainties in domestic and external conditions and their
effects, the progress of monetary policy normalization by the US
Federal Reserve, and the trend of increase in household debt," the
bank said.
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