South Korea’s central bank retained its key interest rate for the seventh straight meeting and raised its inflation projections citing higher cost pressures. <\/p>\n
The Monetary Policy Board of the Bank of Korea, governed by Rhee Chang-yong, decided to retain the key base rate at 3.50 percent.<\/p>\n
As inflation is projected to be higher than previously forecast and economic growth continues to improve, policymakers decided to maintain a restrictive policy stance for a sufficiently long period of time. <\/p>\n
The policy rate has been raised by a cumulative 300 basis points in the current tightening cycle that began in August 2021. <\/p>\n
Capital Economics economist Gareth Leather said the policy rate will be left unchanged throughout the early part of next year. <\/p>\n
However, with growth set to struggle and inflation likely to slow, policy easing is likely in the second quarter, the economist noted.<\/p>\n
The BoK raised its inflation outlook citing the higher-than-expected cost pressures. Inflation is expected to ease to 2.6 percent next year from an estimated 3.6 percent in 2023. <\/p>\n
In August, the bank had projected 3.5 percent inflation in 2023 and 2.4 percent next year.<\/p>\n