By Choonsik Yoo and Jihoon Lee
SEOUL (Reuters) – South Korea’s central bank left interest rates unchanged at its third meeting on Thursday after a 1-1/2-year tightening cycle, while slightly lowering this year’s economic growth forecast.
The Bank of Korea announced that its seven-member Monetary Policy Committee voted to keep the policy rate at 3.
The decision was in line with the forecasts of all economists polled by Reuters. Most respondents predicted the next rate move would be a cut, likely in the final quarter of the year.
It said in a statement that inflation would ease quickly for some time but could still rebound by the end of the year, but gave no indication whether it conceded the market view that its tightening cycle was over.
“Regarding the need to further increase the base interest rate, the Committee will make a comprehensive assessment of the pace of inflation slowdown, economic downside risks and financial stability risks, the impact of the increase in the benchmark interest rate, and changes in the monetary policies of major countries. judgments made under the circumstances,” it said.
Bank of Korea started raising rates2021 in August to curb inflation, well before other major central banks around the world, and raised rates in total300 points to January of this year.
The Bank of Korea said it had lowered its economic growth forecast for this year to 1.4% from 1.6% forecast in February, while keeping its inflation forecast for this year at 3.5%.
Rhee has repeatedly said the central bank may cut its growth forecast.
Asia’s fourth-largest economy narrowly avoided a recession after cooling exports in the first quarter after weak exports. Inflation has slowed since peaking last July, but remains well above the central bank’s 2 percent target.