Today (23rd), the Bank of Korea hinted at the possibility of additional base rate hikes, saying, "Next year's base rate will continue its management stance focusing on price stability so that the inflation rate can converge to the target level (2.0%)."
In the report titled '2023 Monetary and Credit Policy Operation Direction' released today, the Bank of Korea announced its policy direction, saying, "The growth rate of the domestic economy is expected to slow, but the rise in consumer prices, exceeding the target level, is expected to continue next year." It is.
Regarding inflation next year, the BOK said, "The rate of increase in consumer prices is expected to be in the mid-3% range, and the core inflation rate (excluding food and energy) is expected to be in the upper 2% range." It will be lower than this year, but the upward trend will continue next year, exceeding the target level of 2%, due to the transfer of accumulated cost increase pressure to the price (electricity and gas bills, processed food, basic items, etc.).”
Regarding economic growth, he said, “Until the first half of the year, it will show a growth trend that is below the potential level, mainly due to the global economic slowdown.” I will do it,” he predicted.
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However, the Bank of Korea's analysis is that the sluggish growth may gradually ease after the second half of the year as external uncertainties decrease.
There are concerns that the financial and foreign exchange markets next year will also lead to an unstable situation due to great volatility.
The Bank of Korea said, "Considering the monetary tightening trend of major countries and credit alertness in the real estate-related capital market, high volatility in capital outflows and major price variables will continue for a considerable period of time." There is also a possibility that uncertainty in the financial market related to PF) loans will intensify again.”
(Photo = Courtesy of the Bank of Korea, Yonhap News)