In a move that aligns with Wall Street Journal analyst predictions, the Bank of Korea has for the sixth time held its benchmark seven-day repurchase rate steady at 3.50%. The decision, announced on Thursday, comes amid rising inflation and signs of an economic slowdown.
These analysts predict that the rate will remain stable through the end of 2023, with potential cuts in 2024 aimed at stimulating modest GDP growth and easing household financial stress. This forecast comes as South Korea's economy shows signs of slowing down, despite indications of recovery.
A year-long contraction in exports, largely due to fluctuating oil prices, has marked this slowdown. The bank projects modest GDP growth of 1.4% in 2023, following a rise of 2.6% in 2022.
Inflation continues to be a concern, with the bank predicting an above-target inflation rate of 3.5% for this year as core inflation trends lower.
Adding to the economic uncertainty is the ongoing Israel-Hamas conflict, which is contributing to global economic instability. The Bank of Korea's decision to uphold its benchmark rate is seen as a measure to navigate these challenging economic conditions while keeping an eye on potential future adjustments.
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