SEOUL, KOREA –The central bank decided to maintain its key interest rate at 2.75%. The benchmark interest rate has been frozen after having been lowered last July and October.
The decision is grounded on external factors. The U.S and emerging countries have shown moderate economic rebounding while European countries are still struggling from lagging economic activities. “At home, exports have been favorable and investment has risen while consumption has fallen, subsequently leading to a slow growth pace. Korea’s economy is expected to see its GDP gap grow larger, owing to the euro zone’s weak economic activities and the slow recovery of the global economy,” Kim Choong-soo, a governor of the Bank of Korea (BOK) said at a press conference on February 14th.
The consumer price and underlying inflation along with the exception of agricultural and oil products rose by 1.5% and 1.2% respectively. The inflation rate is expected to be low on the grounds of weakening demand.
“In the financial market, share prices have fallen, and the exchange rate has increased partially owing to the outflow of foreign securities investment. The long-term market rate fluctuated slightly. Meanwhile, North Korea’s nuclear test on February 12 had little impact on the financial market,” the BOK head said.
