SEOUL ⸺ South Korea’s central bank on Thursday warned that consumer inflation could gain traction at a faster-than-expected pace with the ongoing recovery from the pandemic.
“Inflation could temporarily increase due to normalization of economic activities with ongoing vaccination, and as pent-up demand shows up,” the Bank of Korea (BOK) said in its monetary policy report.
South Korea’s consumer inflation accelerated to a 13-month high in February on improving domestic demand and rising global oil prices, further signalling a gradual recovery in Asia’s fourth-largest economy.
The BOK in February raised this year’s inflationoutlook to 1.3% from 1.0% earlier, while keeping the policyinterest rate unchanged at a record low of 0.50%.
The BOK also said it will closely monitor local bond yields of long-term maturity and take appropriate measures should volatilities worsen.
Reporting by Cynthia Kim; Editing by Rashmi Aich; Reuters