Gold Silver Reports (GSR) – Bank of Korea Holds Interest Rate as Inflation Trails Target – The economy remains on track to grow 3 percent this year but inflation is projected to register 1.6 percent, slightly below the central bank’s previous forecast, Governor Lee Ju-yeol said during a news conference.
The decision to keep the seven-day repurchase rate at 1.5 percent was widely expected, and the small inflation downgrade — from 1.7 percent — did little to alter expectations for further rate increases during the second half of the year.
“We see risks to Korea’s growth and inflation outlooks as balanced and still see a chance of two rate hikes later this year,” said Ma Tieying, an economist at DBS Bank. Ma said inflation may pick up in coming months due to higher prices for oil and other raw materials.
The Bank of Korea left its key interest rate unchanged on Thursday, as inflation is expected to remain below its target for the time being and trade tensions are clouding the outlook.
Still, some investors took the inflation forecast as a sign that the prospects for rate increases have dimmed, with the won weakening to 1,070.55 at 1:17 p.m. local time. – Neal Bhai Reports (NBR) INDIA
