© Reuters. SUBMIT PICTURE: A female stores at an underground shopping district in the Gangnam location of Seoul, South Korea, June 28, 2016. Picture taken June 28, 2016. REUTERS/Kim Hong-Ji
By Choonsik Yoo and Jihoon Lee
SEOUL (Reuters) -South Korea’s customer inflation slowed for a 2nd month in September, information revealed on Wednesday, however economic experts stated the information would do little to alter the reserve bank’s tightening up predisposition amidst growing talk it might select a larger walking next week.
Economists stated the current information recommended inflation was at or past its peak, however anticipated the reserve bank to adhere to its position offered the weakening won and an aggressive financial policy in the United States.
The customer cost index (CPI) increased 5.6% in September from the very same month a year back, according to the Statistics Korea information, slowing for the 2nd straight month. In August, inflation cooled to 5.7%, the very first downturn in 7 months.
An aggressive tightening up position by the U.S. Federal Reserve has actually raised economic experts’ expectations that the Bank of Korea might raise the policy rate of interest by a bigger-than-usual 50 basis points next week for the 2nd time on record.
“I think overall inflation pressures have already past their peak in South Korea, but the Bank of Korea is not making policy decisions only on inflation numbers but has to consider the U.S. policy and the foreign exchange rate,” stated Moon Hong-cheol, financial expert at DB Financial Investment.
September’s yearly rate of development in the CPI was the slowest in 4 months and somewhat listed below economic experts’ average projection for 5.7%, although forecasts varied extensively.
The Bank of Korea has actually raised its policy rate of interest by an overall of 2.0 portion points considering that August in 2015 from record-low 0.5% to eliminate inflation and Governor Rhee Chang-yong has actually stated tightening up position would continue for the time being.
The Bank of Korea’s policy board next fulfills on Oct. 12.
The Bank of Korea verified at an internal conference on Wednesday its previous view that inflation potential customers doubted, noting the won and worldwide oil costs as the primary possible chauffeurs of future inflation.
The won’s high fall has actually raised issues about possible capital flight and increasing import costs. The currency has actually compromised by 16% versus the dollar up until now this year.
The core customer cost index, which removes off unstable food and energy costs, fell month-on-month for the very first time in a year although its yearly rate sped up to 4.1% from 4.0% in August.