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Wednesday, July 17, 2024
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Bank of Korea maintains stance, holds rates

The Bank of Korea (BOK) decided to keep its policy rate unchanged for the fourth consecutive meeting, signaling its commitment to maintaining a restrictive policy stance in order to control consumer inflation.

The BOK kept the seven-day repurchase rate at 3.5%, aligning with the predictions of all 15 economists surveyed by Bloomberg News. In its statement, the central bank emphasized its intention to continue the restrictive policy stance for a significant duration, with a focus on ensuring price stability.

The BOK’s decision to maintain the status quo reflects its objective of curbing price growth while avoiding excessive pressure on a sluggish economy and mitigating credit strains.Central bank of the year: Bank of Korea - Central Banking

Although inflation has recently shown a slowdown, the central bank expects it to rise again, reaching around the 3% level in the future.

Following the BOK’s decision to maintain policy stability in May, Governor Rhee stated that the resolution was unanimous, with six out of seven board members open to the possibility of eventually raising the terminal rate to 3.75%.

The South Korean economy faces a challenging combination of slowing economic activity alongside persistent strength in underlying price trends, despite the deceleration of headline inflation.
Uncertainties persist in the trade sector, particularly regarding the timing of a rebound in the chip industry, even though some improvement was observed in June.

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