SEOUL — The Monetary Policy Board of the Bank of Korea announced today that it would leave the Base Rate unchanged at 3.50% for the intermeeting period, citing heightened uncertainties surrounding inflation and economic growth.
According to Yonhap News Agency, the decision comes as concerns grow over the impact of prolonged restrictive monetary policies in major countries and geopolitical risks. The board sees a necessity to monitor household debt growth and maintains that the current restrictive policy stance is appropriate. The board will continue to assess changes in both domestic and external policy conditions for future Base Rate adjustments.
Internationally, uncertainties have risen due to restrictive monetary policies and the Israel-Hamas conflict. Global economic growth is slowing, inflation in major countries remains high, and market volatility has increased. Domestically, economic growth has been modest, primarily due to easing in export sluggishness. The GDP growth for the year is expected to align with the August forecast of 1.4%.
Consumer price inflation increased to 3.7% in September from August, influenced by the rise in the price of energy and agricultural products. However, core inflation and short-term inflation expectations remained at 3.3%. The board forecasts that inflation will moderate to the lower-3% range by the end of this year and continue to gradually decline in 2024.
Financial market volatility has increased with signals from the U.S. Federal Reserve of prolonged high policy rates and expanding geopolitical risks. Long-term Korean Treasury bond yields and the Korean won to U.S. dollar exchange rate have risen significantly, while stock prices have declined.
The board plans to continue its monetary policy aimed at stabilizing consumer price inflation, keeping an eye on economic growth and financial stability. Given the heightened uncertainties, the board will maintain a restrictive policy stance with an emphasis on price stability.