Bank of Korea says highly uncertain how swiftly inflation will cool

SEOUL, Dec 20 (Reuters) – South Korea’s central bank said on Tuesday the country’s consumer inflation would remain around 5% for some time and then gradually ease, but cautioned that domestic and global factors are raising uncertainty about how fast prices will slow.

“Going forward, uncertainty is high with regard to the oil prices, foreign exchange rates, domestic public utility fares and the pace of economic growth,” the Bank of Korea said in a twice-yearly inflation report.

The assessment was in line with its views disclosed at BOK Governor Rhee Chang-yong’s news conference on Nov. 24 about the policy board’s decision that day to raise the benchmark interest rate to the highest level in a decade.

The central bank’s latest projections released last month are for inflation to slow to 4.2% in the first half of 2023 from an estimated 5.6% in the second half of 2022, and to further ease to 3.1% in the second half of 2023.

Its medium-term inflation target is around 2%.

Reporting by Choonsik Yoo Editing by Shri Navaratnam

Our Standards: The Thomson Reuters Trust Principles.

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