|
For the eighth straight month the Bank of Korea has kept the key interest rate frozen at 5 percent. The bank's Monetary Policy Committee meeting ended much earlier than usual on Thursday suggesting easy agreement among committee members.
This decision comes as no surprise amid soaring prices but does go against the wishes of the Strategy and Finance Ministry, which has been pushing for a rate cut to stimulate economic growth.
The bank explained that with rising consumer prices and the hike of real estate prices in some areas, excess liquidity in the market may have negative effects in the overall economy.
Producer prices bounced up 8 percent in March year-on-year, the fastest pace in almost ten years. Figures have been picking up steadily and in March prices increased by almost 2 percentage points from a month earlier. This hike comes as global prices of goods such as crude oil, grains and metals soar.
A central bank official says that although some say global oil prices have peaked it will be hard for prices to make a sudden plunge. And as long as oil prices keep rising producer prices will also stay high.
Last month's consumer prices also increased by almost 4 percent year-on-year. And with producer prices eventually being reflected in the costs consumers have to bear, it seems the strain on Koreans' wallets may be prolonged.
Arirang News
|
