This post was originally published on this site
By Ronnie Harui
The Bank of Korea will “appropriately” adjust monetary policy accommodation in line with improvement in economic conditions, in order for consumer price inflation to be stabilized at the target level, the central bank said in its report on monetary policy for 2022.
Consumer price inflation is expected to fall somewhat to a level close to the target level of 2.0%, the BOK said in the report released Friday. Core inflation is forecast to rise to a level close to but below 2.0%.
However, it should be noted that inflationary pressures could be greater than expected, partly due to prolonged global supply bottlenecks, expanded demand-side pressures and rising inflation expectations, the central bank said.
South Korea’s economy is forecast to maintain its trend of solid growth of around 3.0%, the central bank said. However, uncertainties surrounding the future growth path are assessed to be high. The main potential risk factors for the future growth path are the development of the pandemic and the pace of easing in global supply constraints, it said.
Financial and foreign exchange markets could see heightened volatility from time to time, depending on the developments of major risk factors at home and abroad, the BOK said.
While ensuring the stability of the financial and foreign exchange markets, it will continue efforts to lessen the risk of the build-up of financial imbalances, the central bank said.
Write to Ronnie Harui at ronnie.harui@wsj.com
