The Central bank of South Korea, as expected, left the interest rate unchanged at 3.5% (the highest value since 2008), as the policy makers shifted their attention to supporting the economy and decided to assess the impact of past rate hikes. Thus, the Central Bank has completed its cycle of tightening monetary policy after raising the rate by a total of 300 basis points since August 2021.
However, the head of the Central Bank said that a further rate increase is not excluded. "Previously, it was common to pause to study the need for further rate increases. Today's decision can be understood accordingly," the head of the Central Bank added.
As for the prospects of the economy, the Central Bank lowered the forecast of GDP growth for the current year by 0.1%, to 1.6%. Meanwhile, consumer inflation is expected to remain at around 5% in February and gradually decline due to the underlying effect. Overall, the CPI forecast for 2023 was lowered to 3.5% from 3.6%.