South Korea’s central bank on Thursday named low global oil prices as a main cause of the country’s slow consumer price increase in the first half, insisting its local demands have remained strong and will continue to expand. One forecast a cut to 1.0 percent.
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A supplementary budget to boost flagging growth is being prepared for implementation later in the year.
The statement, distributed ahead of a press conference by Governor Lee Ju-yeol, was in line with a requirement set a year ago that the central bank explain why inflation was below its inflation target of 2 percent.
Any changes to the growth forecast will be announced later on Thursday when BOK research officials give details about the quarterly economic outlook revision.
“The governor is in wait-and-see mode”.
Meanwhile, The Korea Composite Stock Price Index (KOSPI) traded up 0.14 percent at 2,008.32 points by 05:30 GMT.
There have been concerns that the THAAD unit, aimed at curbing North Korea’s missile threats, could fray economic relations with China, South Korea’s biggest trade partner.
And with major economies like Japan gearing up for more monetary easing in the wake of the incident, experts say it’s unlikely that Korea will keep its own rate unchanged.
Also, the central bank said it has not noted any declines in expected inflation or seen slowdowns in wage growth in South Korea, which in the past in other countries has led to further weakening in the inflation rate.
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