Overview
- The Bank of Korea, which voted Friday, held its base rate at 2.50% for a seventh straight meeting in a unanimous decision.
- Policymakers pointed to the Iran conflict for driving oil prices higher, weakening the won toward the 1,500-per-dollar range, and increasing market volatility, so they opted to wait and assess the fallout.
- Consumer inflation reached 2.2% in March, and the bank now expects this year’s pace to exceed its 2.2% February forecast because energy costs have surged, though it still views stagflation risk as low barring a severe escalation.
- The bank said growth this year will fall below its 2.0% February projection as higher energy prices and supply constraints bite, even with a proposed 26.2 trillion won budget to ease fuel burdens on households and businesses.
- Friday’s meeting was Governor Rhee Chang-yong’s last before his April 20 departure, and nominee Shin Hyun-song is set to succeed him and steer policy at upcoming meetings.