Friday, January 13, 2012

South Korea Central Bank Keeps Repo Rate at 3.25%

The Bank of Korea held its 7-day repurchase rate steady at 3.25%.  The Bank said: "In Korea, exports have kept up their steady increase, but domestic demand has been subdued with consumption and construction investment decreasing from the previous month. On the employment front, the number of persons employed has sustained its large scale of increase, led by the private sector. The Committee anticipates that domestic economic growth will gradually return to its long-term trend level going forward, after remaining subdued for some time due mostly to the impact of external risk factors."

At its Decmber meeting 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 steady consumer price inflation of 4.2% in November, compared to 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 3% over the past year against the US dollar, while the USDKRW exchange rate last traded around 1,149.


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