S. Korea to maintain 2% inflation target – BOK’s governor

South Korea’s central bank will keep its two per cent inflation target until the next policy review, as low inflation is not expected shortly, according to the bank’s governor Rhee Chang-yong on Wednesday.

“The Bank of Korea (BOK), through consultation with the government, has decided to maintain the current price stability target of 2 per cent until the next review,” the governor stated.

Rhee stated that measures to control high inflation have been successful recently. He also mentioned that inflation is projected to remain stable over the next two years, with other major central banks also keeping their targets at two per cent.

The central bank will keep evaluating the need for enhancements in its inflation-targeting system, as stated by Rhee during a press conference following a bi-annual review of the bank’s monetary policy.

The central bank predicts that the economy will not experience low inflation below 1 per cent in the next year or two. Economic growth is expected to be in the upper-1 per cent range despite price pressure from a strong dollar and climate change.

South Korea’s consumer inflation was lower than anticipated last month at 1.5 per cent, prompting the central bank to reduce interest rates for the second consecutive meeting to 3.00 per cent to support a sluggish economy.

Attribution: Reuters

Subediting: M. S. Salama