By Kwanwoo Jun
South Korea’s central bank stood pat for a second consecutive rate decision amid signs of easing inflation and concerns over weakening economic growth.
The Bank of Korea kept the benchmark seven-day repurchase rate unchanged at 3.50% on Tuesday as expected, continuing a pause in its rate-increase campaign to curb the country’s soaring price growth.
All 23 analysts surveyed by The Wall Street Journal ahead of the bank’s decision had forecast no rate move in April.
Inflation has recently eased in South Korea, with the benchmark consumer price index rising 4.2% from a year earlier in March–the slowest pace since March 2022–after the gains of 4.8% in February, 5.2% in January and 6.3% at the latest peak in July 2022.
As inflation remains above the its targeted 2.0%, the central bank still left the door open for further rate increases.
But South Korea’s cooling economy is increasing pressure to end or ease policy tightening. Exports, the main growth engine of the country, contracted on year for a sixth consecutive month in March due to sluggish demand and weakening private consumption on higher borrowing costs.
The bank recently trimmed its growth and inflation forecasts, expecting gross domestic product to grow 1.6% and consumer-price growth to average 3.5% for 2023.
Write to Kwanwoo Jun at [email protected]
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