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Dow Jones Newswires: Bank of Korea raises interest rate by 25 basis points, rate hike slows down

South Korea’s central bank cuts its growth and inflation forecasts for 2023 after slowing the pace of rate hikes to curb high inflation.

The Bank of Korea cut its benchmark seven-day repurchase rate by 25 basis points to 3.25% on Thursday after a sharp 50 basis point hike in October. Gross domestic product growth forecasts for next year have risen sharply and inflation is expected to ease moderately, but remain well above the bank’s 2 percent target.

The bank now expects the country’s GDP to grow by 1.7% in 2023, down from its August forecast of 2.1%. It expects consumer prices to rise 3.6% in 2023, compared with a previous forecast of 3.7%.

Eighteen of 20 analysts polled by The Wall Street Journal ahead of the rate decision were predicting 25% – the point for a rate hike.

Most analysts expect the bank to continue tightening policy, but some predict it could start cutting rates in 2023 to support growth.

South Korea’s economy is set to grow 4.1% in 2021, but growth has lost momentum this year, with exports falling for the first time in two years in October on weak global demand. The country has recorded a trade deficit for seven consecutive months.

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