[Full Text] BOK "Housing Prices Rising in Both Seoul Metropolitan Area and Provinces... Maintaining Monetary Policy Easing"

FOMC "Growth Rate Matches August Forecast of -1.3%"

[Asia Economy Reporter Jang Sehee] The Bank of Korea kept the base interest rate at 0.50% on the 14th, maintaining the freeze for the third consecutive time following July and August. The economic slowdown caused by the resurgence of COVID-19 in August hindered interest rate hikes, while the rapid liquidity concentration in stocks and real estate prevented interest rates from falling.

The following is the full text of the monetary policy direction

The Monetary Policy Committee decided to operate monetary policy by maintaining the Bank of Korea base rate at the current level (0.50%) until the next monetary policy direction decision.

The global economy continued to show signs of easing sluggishness, but the pace slowed somewhat due to the impact of the COVID-19 resurgence. In international financial markets, major price variables such as stock prices and interest rates fluctuated significantly due to concerns over the COVID-19 resurgence and changes in expectations regarding major countries' economic stimulus measures. Going forward, the global economy and international financial markets are expected to be influenced by the development of COVID-19 and the ripple effects of policy responses by each country.

The domestic economy showed a slow recovery trend. Although export sluggishness eased, private consumption remained weak due to the resurgence of COVID-19, facility investment recovery was constrained, and construction investment continued to adjust. Employment conditions remained poor, with a significant decrease in the number of employed persons. Going forward, the domestic economy is expected to show a moderate recovery centered on exports, but the uncertainty of the growth path is judged to be high. The GDP growth rate for this year is expected to generally align with the August forecast (-1.3%).

The consumer price inflation rate rose to around 1% due to a significant increase in prices of agricultural, livestock, and fishery products caused by adverse weather conditions. The core inflation rate (excluding food and energy) slightly increased from the mid-0% range, and the general public's expected inflation rate rose to near 2%. Going forward, the consumer price inflation rate and core inflation rate are expected to decline and remain at the low to mid-0% range for some time due to the continued impact of falling international oil prices and low inflationary pressure from the demand side.

In financial markets, influenced by movements in international financial markets, long-term market interest rates and stock prices fluctuated significantly, while the won-dollar exchange rate fell sharply. Household loans increased, and housing prices continued to rise in both the metropolitan area and provinces.

The Monetary Policy Committee will operate monetary policy with attention to financial stability while supporting the recovery of growth and ensuring that the inflation rate stabilizes at the target level in the medium term. As the domestic economic recovery is expected to be slow and inflationary pressure from the demand side remains low, the easing stance of monetary policy will be maintained. In this process, the Committee will closely monitor the extent of the COVID-19 resurgence, its impact on finance and the economy, changes in financial stability, and the ripple effects of past policy responses.

This content was produced with the assistance of AI translation services.