Friday, December 9, 2011

Bank of Korea Keeps Interest Rate at 3.25%

The Bank of Korea maintained its 7-day repurchase rate unchanged at 3.25%.  The Bank said: "In Korea, exports have shown a steady increase, but consumption has remained at a level similar to that in the previous month and facilities investment has decreased sharply. The trend of improvement in employment conditions has been sustained, led by the private sector. The Committee anticipates that the domestic economy will not deviate significantly from 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 November 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 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 1% so far this year against the US dollar, while the USDKRW exchange rate last traded around 1,140.


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