The Bank of Korea said Tuesday it expects the country's inflation pressure to continue easing, but won't change its current forecasts for this year and the next because of upside risks such as bad weather and the pressure to hike public fees.
From the demand side, inflation pressure will ease alongside the lowered [economic] growth outlook as global uncertainties hurt exports. A steep fall in prices of oil and global raw materials also helps contain inflation, the central bank said in a research report, which basically repeats its stance on inflation.
Early this month, the BOK unexpectedly cut its benchmark interest rate by a quarter percentage point to 3%--the first rate cut in over three years--as exports tumbled on weak global demand.
A day after the rate cut, the central bank trimmed its outlook for 2012 economic growth to 3% from 3.5% previously, citing a slowdown in the global economy and Europe's sovereign-debt crisis. The BOK also cut its 2012 inflation forecast to 2.7% from 3.2%, saying price hikes would stay comfortably below the midpoint of the BOK's target band of 2%-4%. It expects inflation to slightly accelerate to 2.9% next year.
The BOK, however, said Tuesday it has no intention for now to change its latest inflation projections.
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