The Bank of Korea’s monetary policy board on Thursday decided to keep the nation’s benchmark interest rate unchanged at the record low 1.50 percent – in line with expectations.
The central bank had trimmed rates by 25 basis points in both its June and March meetings. That followed quarter-point cuts in October and August – before which the central bank had kept the rate unchanged for 14 straight meetings.
“The board forecasts that the global economy will maintain its recovery going forward, albeit at a moderate pace, centering around advanced economies such as the US, but judges that the possibilities exist of its being affected by heightened international financial market volatility,” the bank said.
The BoK remained satisfied that the threat of deflation had been addressed by the rate cut in June, as the inflation rate accelerated to 0.9 percent on year in October – although price growth remained below 1.0 percent for the 10th straight month.
On a monthly basis, inflation was flat versus expectations for a decline of 0.1 percent following the 0.2 percent contraction in the previous month.
Core inflation, which excludes the volatile costs of food, added 0.2 percent on month and 2.3 percent on year in October after easing 0.1 percent on month and rising 2.1 percent on year in September.
“The board forecasts that inflation will continue at a low level, due mainly to the effects of the low oil prices. In the housing market, the upward trends of sales and leasehold deposit prices have persisted in both Seoul and its surrounding areas and the rest of the country,” the bank said.
And while much of the past month’s economic data has been fairly positive, the bank hinted that additional stimulus may still be in the cards in the future.
South Korea’s gross domestic product climbed a seasonally adjusted 1.2 percent on quarter in the third quarter of 2015. That handily topped expectations for an increase of 0.8 percent following the 0.3 percent gain in the second quarter.
On a yearly basis, GDP jumped 2.6 percent – also exceeding forecasts for 2.4 percent and up from 2.2 percent in the three months prior.
Industrial output in South Korea jumped 1.9 percent on month in September, beating forecasts for a decline of 0.3 percent following the downwardly revised 0.2 percent gain in August (originally 0.4 percent).
On a yearly basis, industrial production spiked 2.4 percent – also topping expectations for a gain of 0.3 percent following the downwardly revised 0.1 percent increase in the previous month (originally 0.3 percent).
“The board forecasts that the domestic economy will continue its recovery going forward, centering around domestic demand activities, but in view of external economic conditions judges the uncertainties surrounding the growth path to be high,” the bank said.
The material has been provided by InstaForex Company – www.instaforex.com