Bank of Korea Leaves Monetary Policy Unchanged in November

In its November meeting, the Moneatry Policy Committee of the Bank of Korea decided to leave the base rate unchanged at 2.50 percent for the sixth straight meeting, as the inflation remains under control and the economy recovers moderately.

Excerpt from the statement by the Bank of Korea:

In Korea, indicators related to domestic demand slumped temporarily, but as exports have sustained their buoyancy the Committee appraises the economic recovery to have continued in line with the trend of growth. The Committee expects that the domestic economy will maintain a negative output gap for a considerable time going forward, although it forecasts that the gap will narrow.

The Committee forecasts that inflation will remain low for the time being, owing primarily to the inflation reducing effects of policies such as free childcare provision and to the downward stabilization of international agricultural prices.

The domestic financial markets have moved mainly in response to the reaching of agreement in the US fiscal negotiations and to changes in the expectations of a delay in QE tapering. Stock prices have fallen again, after having risen substantially, in line with shifts in the flows of foreigners’ stock investment funds, and the Korean won has depreciated recently, after having sustained a trend of appreciation due to continuation of the current account surplus. Long-term market interest rates have risen, after fluctuating within a narrow range.

Looking ahead, while paying close attention to developments in and the influences of external risk factors, and monitoring the effects of the Base Rate cut and of the government’s economic policies including the supplementary budget, the Committee will conduct monetary policy so as to keep consumer price inflation within the inflation target range over a medium-term horizon while ensuring that the growth potential is not eroded due to the continuation of slow growth.

Bank of Korea Leaves Monetary Policy Unchanged in November

Bank of Korea | Joana Taborda |
11/14/2013 7:39:43 AM