© Bloomberg. People dine at a food stall in Gwangjang Market in Seoul, South Korea, on Thursday, March 3, 2022. South Korea kicked off two days of early voting on March 4 as the country battles a record wave of coronavirus infections, while data showed inflation unexpectedly accelerated in February as rising costs weighed on voters.
(Bloomberg) — Stubbornly high inflation overshadowing South Korea’s economic recovery is likely to continue for a considerable time, the Bank of Korea said Thursday, citing the crisis in Ukraine and rising food prices among risks.
While South Korea will probably maintain sound economic growth this year amid pandemic uncertainties, inflation is expected to stay above the BOK’s target of 2% for some time, the central bank said in a quarterly report. The BOK will therefore appropriately adjust the degree of accommodation of its monetary policy, it added.
The report comes after the bank held its benchmark interest rate at 1.25% last month as it paused to assess the impact of its three hikes since August. The latest policy statement suggests the BOK is on track for a potential quarter percentage point hike in April or May to tamp down inflationary pressures.
The report noted growing concerns about energy supplies amid the Russian invasion of Ukraine and highlighted rising crop prices as irregular weather hurts production globally.
The bank said it doesn’t rule out the chance of an extended period of high inflation as rising wages and consumer prices feed each other amid growing inflation expectations.
The BOK will seek to stabilize inflation around its target as it safeguards an economic recovery from the pandemic, it said.
©2022 Bloomberg L.P.
Bank of Korea Sees Inflation Elevated for Considerable Period
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