The Bank of Korea held off raising borrowing costs for an eighth straight month as the economy slowed and exports declined due to the European debt crisis. Governor Kim Choong Soo and his board kept the benchmark seven-day repurchase rate unchanged at 3.25%, the central bank said in a statement in Seoul today.
In a policy statement, the BOK reiterated its intention to keep prices stable by maintaining inflation close to the midpoint of its 2%-4% target range over a medium-term horizon, which suggests inflation isn't an immediate concern as demand-side pressures are easing amid high downside risks to growth.
The BOK also said it expects the pace of global economic recovery to be very moderate. It noted that some economic indicators in the US, such as employment, have shown improvement, but that risk factors stemming from Europe's ongoing sovereign debt problems and geopolitical risks in the Middle East still exist.
A dip in the Korean inflation rate to 3.4% in January was largely because of a high year-earlier level, the central bank said in a report to the National Assembly this week. Price pressures will likely persist on elevated inflation expectations and unstable oil costs, it said.
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