ID :
22028
Wed, 10/01/2008 - 00:44
Auther :
Shortlink :
http://m.oananews.org//node/22028
The shortlink copeid
BOK sees high inflation, slowing growth in H2
SEOUL, Sept. 30 (Yonhap) -- South Korea's central bank said Tuesday that domestic
inflation will remain high during the second half on a weaker won despite recent
retreats in oil prices.
"Although oil prices are expected to be on a downward trend, upside pressure on
inflation is lingering due to the local currency's fall against the U.S. dollar,"
the Bank of Korea (BOK) said in its monetary policy report. "A planned increase
in public utility rates will likely add to uncertainties."
The report came as South Korea's consumer prices jumped 5.6 percent on-year in
August, breaching the BOK's target range of 2.5-3.5 percent for the ninth
straight month. The BOK raised its key interest rate in August by a quarter
percentage point to 5.25 percent in a bid to curb rising inflation expectations,
the first increase in a year.
According to the central bank, as of the of August, there is a 76 percent
possibility that the country's inflation will hover above 5 percent in the second
half and a 24 percent chance that inflation may stay between 4 and 5 percent.
In early July, the BOK forecast that inflation would jump 5.2 percent in the
second half on rising energy prices and a weaker won.
The South Korean currency tumbled against the greenback Tuesday, spooked by the
U.S. Congress' rejection of an emergency rescue plan for the ailing financial
sector. The won has declined more than 23 percent against the dollar so far this
year, putting upward pressure on already-high inflation.
Meanwhile, the BOK said the South Korean economy is expected to lose steam in the
July-December period, led by sluggish domestic demand, although exports will
remain robust.
"Overseas expansion is expected to remain brisk due to higher demand from
emerging markets, but rising uncertainty about the Chinese economy after the
Olympic games and a global economic slowdown will likely to add downward risk to
the export growth of South Korea," the BOK said.
The central bank said in July that in the second half, the economy is likely to
grow 3.9 percent from a year earlier, down sharply from an earlier estimate of
4.4 percent.
inflation will remain high during the second half on a weaker won despite recent
retreats in oil prices.
"Although oil prices are expected to be on a downward trend, upside pressure on
inflation is lingering due to the local currency's fall against the U.S. dollar,"
the Bank of Korea (BOK) said in its monetary policy report. "A planned increase
in public utility rates will likely add to uncertainties."
The report came as South Korea's consumer prices jumped 5.6 percent on-year in
August, breaching the BOK's target range of 2.5-3.5 percent for the ninth
straight month. The BOK raised its key interest rate in August by a quarter
percentage point to 5.25 percent in a bid to curb rising inflation expectations,
the first increase in a year.
According to the central bank, as of the of August, there is a 76 percent
possibility that the country's inflation will hover above 5 percent in the second
half and a 24 percent chance that inflation may stay between 4 and 5 percent.
In early July, the BOK forecast that inflation would jump 5.2 percent in the
second half on rising energy prices and a weaker won.
The South Korean currency tumbled against the greenback Tuesday, spooked by the
U.S. Congress' rejection of an emergency rescue plan for the ailing financial
sector. The won has declined more than 23 percent against the dollar so far this
year, putting upward pressure on already-high inflation.
Meanwhile, the BOK said the South Korean economy is expected to lose steam in the
July-December period, led by sluggish domestic demand, although exports will
remain robust.
"Overseas expansion is expected to remain brisk due to higher demand from
emerging markets, but rising uncertainty about the Chinese economy after the
Olympic games and a global economic slowdown will likely to add downward risk to
the export growth of South Korea," the BOK said.
The central bank said in July that in the second half, the economy is likely to
grow 3.9 percent from a year earlier, down sharply from an earlier estimate of
4.4 percent.
