South Korea Central Bank Flags Chances of Faster-Than-Expected Inflation Pace

South Korea
FILE PHOTO: A shopkeeper wearing a mask to prevent contracting the coronavirus waits for a customer at a traditional market in Seoul, South Korea, February 27, 2020. REUTERS/Heo Ran

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.

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Reporting by Cynthia Kim; Editing by Rashmi Aich; Reuters


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