Bank of Korea Holds Repo Rate at 3.25%

The Bank of Korea held its 7-day repurchase rate unchanged at 3.25%.  The Bank of Korea noted: "The Committee expects the high level of inflation to continue in the coming months, driven largely by demand-side pressures resulting from the underlying uptrend in economic activity and by inflation expectations." The Bank also said: "For Korea, the Committee judges the economy to have maintained its underlying upward trend, given for instance that exports show robust growth and that domestic demand is increasing modestly... Going forward, the Committee anticipates that the domestic economy will keep up this underlying trend, even in the presence of external risks."

At its June meeting this year the Bank of Korea increased the 7-day repurchase rate by 25 basis points to 3.25%.  South Korea reported annual consumer price inflation of 4.4% in June (and 3.7% core inflation) up slightly from 4.1% in May, and  4.2% in April, and currently above the Bank's inflation target of 2%-4% through 2012.  On inflation the Bank said: "the prices of processed food products and personal services continued to rise; this uptrend in core inflation is seen persisting for the time being."  The South Korean Won last traded around 1,058 against the US dollar.

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