S.Korea c.bank flags stronger inflationary pressure in H2

  • 6/24/2021
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SEOUL, June 24 (Reuters) - South Korea’s central bank said on Thursday it sees upward inflationary pressure on both the demand and supply fronts amid the country’s ongoing recovery from the pandemic. “Along with the rapid economic recovery, demand-side inflation pressure is growing and will fluctuate around 2% in the second half of the year,” the Bank of Korea said in a bi-annual review of inflation. With consumer inflation at a nine-year high, strong price pressure raises the possibility that the central bank may have to tighten policy sooner than expected. The BOK in May raised this year’s inflation outlook to 1.8% from 1.3% previously, as Governor Lee Ju-yeol said the central bank was preparing to pull back on the extraordinary stimulus extended during the pandemic. The BOK in May kept its base rate at a historic low of 0.5%, as widely expected. Thursday’s report said better private consumption will push up consumer prices in the second half of the year, as people increasingly shop, travel and dine out. Global oil prices are expected to stabilise in the coming months and help offset strong demand-side price pressure, as Iran resumes oil exports, the report said. The BOK next reviews its policy rate on July 15. (Reporting by Cynthia Kim; Editing by Jacqueline Wong) Our Standards: The Thomson Reuters Trust Principles.

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