Bank of Korea stands pat, keeps 2023 growth and inflation forecasts

South Korea’s central bank stood pat on interest rates for a fifth straight time as widely expected and maintained its 2023 economic growth and inflation forecasts.

The Bank of Korea kept the benchmark seven-day repurchase rate unchanged at 3.50% on Thursday, continuing a pause in its policy tightening amid signs that the economy is cooling, with inflation having eased to a 25-month low of 2.3% last month and exports having declined on year for a 10th consecutive month in July.

The bank seems to be shifting away from its rate-increase campaign aimed at curbing inflation.

All 25 analysts surveyed by The Wall Street Journal ahead of the bank’s decision had forecast no rate move in August, with a majority of them expecting the bank to stand pat through 2023. Some penciled in a rate cut late this year or early next year to help boost growth.

The country’s gross domestic product is forecast to expand 1.4% in 2023, unchanged from its May projection, following the previous year’s 2.6% growth, the bank said Thursday.

Inflation is expected to average 3.5% for 2023, also unchanged from its earlier projection, it said.

For 2024, the bank trimmed its GDP growth forecast to 2.2% from 2.3% and kept its inflation estimate at 2.4%.

BOK Gov. Rhee Chang-yong has cautioned against any premature policy easing, saying that rate cuts could come only when inflation is certain to converge on the bank’s 2.0% annual target.

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