The Bank of Korea ( BOK ) kept its benchmark base rate at 3 %
The Bank of Korea ( BOK ) kept its benchmark base rate at 3 % today in line with expectations, after having raised it in two of the previous three months to fight gains in consumer prices. However the central bank echoed that inflation remains a concern and suggested further rate hikes in coming months. Inflation has been plus/minus 1 % from its inflation target of 3 % for the last three months.
The BOK has raised its benchmark interest rate 4 times since July 2010 from a record low of 2 % because of positive economic growth outlook and worries about inflation. The increases have come as numerous other central banks have also been tightening policy to rein in prices.
South Korea's economy which is asia's 4th largest grew 6.2 % last year, recovering from an expansion of only 0.3 % in 2009 due to the the global crisis that followed the financial meltdown of late 2008.
South Korea's consumer price index increased 4.7 % in March from the year before, as costs for food and gasoline rose. It was the biggest increase in monthly inflation since the 4.8 % rise in October 2008.
The BOK has forecast that growth will slow this year to a more sustainable level of 4.5 % and is expected to be 4.7 % in 2012. The International Monetary Fund in its latest outlook for the global economy released Monday agreed with the bank's forecast for this year, but said it expects South Korean growth to slow to 4.2 % in 2012.
