The Korea Herald

지나쌤

BOK to keep accommodative monetary policy in 2017

By 임정요

Published : Dec. 29, 2016 - 10:55

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South Korea's central bank said Thursday it will maintain an accommodative monetary policy next year, while staying focused on financial market stability.

With the local economy expected to continue "modest" growth, "high uncertainties" are persistent, the Bank of Korea pointed out in a report on its monetary strategy.

It forecast 2-percent-range growth of Asia's fourth-biggest economy in 2017.

The BOK cited the slowing expansion of civilian consumption and construction investment despite a slight improvement in exports and facility improvement as well as a mild recovery in the global economy.

Positive factors include stimulus-oriented policies by major economies.

Among external downside risks are the US move to raise interest rates, the spread of protectionist trade and the possibility of a slowdown in Chinese economic growth, it added.

The BOK has been in dilemma since cutting the benchmark interest rate to a record low of 1.25 percent in June.

The real economy shows no clear signs of a significant recovery, while the US is the path to lifting rates.

Another setback is inflation. The BOK's mid-term inflation target is set at 2.0 percent on-year.

"As consumer prices are on the gradual rise, it is expected to get close to the inflation stability target," the BOK said, citing international oil price hikes and eased concern about global deflation. (Yonhap)