Thursday, September 8, 2011

Bank of Korea Holds Interest Rate at 3.25%

The Bank of Korea kept its 7-day repurchase rate unchanged at 3.25% as deterioration in global economic conditions delayed the Bank's path to normalization of monetary policy settings.  While noting the importance of the external environment, particularly risks to growth in developed economies, the Bank of Korea said: "Looking ahead, the Committee, while closely monitoring financial and economic risk factors both at home and abroad, will conduct monetary policy with a greater emphasis on ensuring that the basis for price stability is firmly anchored while the economy continues its sound growth."

At its August 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 annual consumer price inflation of 4.7% in July (core inflation of 3.8%), up from 4.4% in June, 4.1% in May, and  4.2% in April, and currently above the Bank's inflation target of 2%-4% through 2012.  The South Korean Won last traded around 1,075 against the US dollar, having gained around 4% this year.


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