Bank Of Korea Keeps Policy Rate Unchanged For Second Straight Meeting

(RTTNews) - South Korea's central bank left its policy rate unchanged for the second straight meeting and pledged to maintain a restrictive stance for a considerable time.

The Monetary Policy Board of the Bank of Korea unanimously decided to keep the Base Rate unchanged at 3.50 percent.

The BoK has hiked its policy rate by a total 300 basis points since August 2021, taking it to the highest level since 2008.

"The Board deems it warranted to judge whether the Base Rate needs to rise further while maintaining the restrictive policy stance for a considerable time," the bank said.

The bank expects inflation to stay above the target for a considerable time although it is projected to continue to slow. "It is too early to be relieved that prices will stabilize," the bank added.

Despite the hawkish stance of members, the BoK will likely reverse its policy stance as inflation pressure ease, ING economist Min Joo Kang said.

Domestic growth is forecast to remain weak until the first half of the year due to the global economic slowdown and the interest rate hikes. From the second half of this year, it is expected to recover gradually with an easing of the sluggishness in the information technology industry and the impact of the Chinese economic recovery.

The central bank forecast overall growth to be slightly below the February's forecast of 1.6 percent.

Inflation is set to fall to the 3 percent range from the second quarter of this year owing to the base effect from the sharp rises in global oil prices last year and weakening pressure from the demand side, the bank observed.

The inflation outlook for this year was left unchanged from the February forecast of 3.5 percent.