Saturday, November 12, 2011

Bank of Korea Keeps Repo Rate at 3.25%

The Bank of Korea maintained its 7-day repurchase rate unchanged at 3.25%.  The Bank said: "domestic demand has faltered but exports have continued to grow strongly. The trend of improvement in employment conditions has been sustained, led by the private sector. The Committee anticipates that the domestic economy will keep up its long-term trend of growth going forward, but recognizes the situation to be one in which downside risks to growth remain high due to the impact of external risk factors."

At its October meeting this year the Bank of Korea also held the interest rate unchanged at 3.25%, after increasing the 7-day repurchase rate by 25 basis points to 3.25% at its June meeting.  South Korea reported a slight moderation in annual consumer price inflation of 3.9% in October, 4.3% in September, 5.3% in August, 4.7% in July 4.4% in June, 4.1% in May, and 4.2% in April. 

The inflation rate is currently just above the Bank's inflation target of 2%-4% through 2012.  The South Korean economy grew 0.7% in Q3 (0.9% in Q2), placing annual GDP growth at 3.4% (3.4% in Q2).  
The South Korean Won (KRW) has weakened by about 1% so far this year, while the USDKRW exchange rate last traded around 1,127.


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