Bank of Korea says highly uncertain how swiftly inflation will cool By Reuters

© Reuters. FILE PHOTO: The logo of the Bank of Korea is seen on the top of its building in Seoul, South Korea, July 14, 2016. REUTERS/Kim Hong-Ji/File Photo

SEOUL (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.

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“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.

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Its medium-term inflation target is around 2%.

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