|    FM Home   |    FM News   |    FM Forum   |    FM Blog   |   
Tuesday 15th of February 2011
February 11, 2011    

South Korea holds interest rates despite inflationary pressures

Bookmark and Share

by Kay Murchie
South Korea holds interest rates despite inflationary pressures

South Korea’s central bank has elected to keep interest rates on hold despite rising inflation.

The move surprised analysts who had expected a further rate rise after last month’s increase to 2.75%.

However, analysts believe rates will be increased next month, with many predicting rates to be between 3.5% and 3.75% by the end of 2011.

Inflation is currently around the 4% mark - at the higher end of the central bank’s 2%-4% target.

Last month, official figures revealed South Korea‘s economy, which is Asia’s fourth-largest, saw growth slow to 0.5% in the October to December period.

Last year, the economy expanded strongly – boosted by exports and increasing consumption and facilities investment.

Analysts expect the rate of economic growth to accelerate in the current quarter due to rising exports and local demand, which, in turn, will drive inflation expectations higher.

Inflationary pressures are rife in Asia and many central banks have opted to hike interest rates in an attempt to combat rising prices.

In the last few weeks, central banks in China, Indonesia and India have all increased interest rates.

Discuss this in the Finance Markets forums

Story link: South Korea holds interest rates despite inflationary pressures




Related financial stories to: South Korea holds interest rates despite inflationary pressures:
Previous: «
Next: »

No Comments »

No comments yet.

RSS feed for comments on this post.

Leave a comment

Tags: , , , higher end, , , , pressures, , ,

Visited 412 times, 2 so far today