Today, the Central Bank of South Korea fixed the main interest rate, for the second time in a row, amid indications of declining inflation.
The Bank of Korea’s Monetary Policy Board kept the benchmark seven-day repo rate unchanged at 3.5 percent, a decision that was widely expected.
This is the second time in a row that the BoK has stabilized its monetary policy after freezing the interest rate last February, and after seven consecutive increases in borrowing costs since April last year.
The continued fixation of the interest rate increases expectations that the Bank will end its hawkish stance on monetary policy amid signs of declining inflation, increasing problems of the economic slowdown, and persistent concerns about global banking turmoil.
South Korean consumer prices, a key measure of inflation, rose 4.2 percent in March from the same period a year earlier, the slowest year-on-year rise in prices.
Although inflation appears to be moderate, South Korea’s economy is also showing signs of slowing, with exports contracting sharply in the face of lower demand in key markets.
South Korea recorded a current account deficit for the second consecutive month in February, the first time in nearly 11 years.
In February, the Bank of Korea lowered its forecast for South Korea’s economic growth this year to 1.6 percent instead of the 1.7 percent it expected three months earlier.
