South Korean consumer prices stayed well above the Bank of Korea’s (BOK) target last month, data released yesterday showed, keeping the pressure on policymakers to continue tightening as central banks move to tamp down inflation.
Consumer prices rose 3.6 percent from a year earlier, edging down from a 3.7 percent gain in December last year, according to BOK data, which ran hotter than economists had expected.
South Korean inflation has held above 3 percent since October last year, well in excess of the bank’s 2 percent target, suggesting that three rate hikes since August have so far failed to cool momentum in the nation’s consumer prices that is part of a global wave.
Photo: Bloomberg
European Central Bank President Christine Lagarde on Thursday said that it is no longer sensible to exclude a rate move this year, while the Bank of England hiked for a second meeting in a row to contain the fastest inflation in three decades.
Still, most economists do not see another increase from the BOK this month, the last meeting before Governor Lee Ju-yeol steps down and as the nation heads into a presidential election.
“This doesn’t mean the BOK will hike its rate again this month, after having moved in January,” strategist Roh Hyun-woo at Hanwha Asset Management said of Korea’s inflation figures. “It’s part of a global upswing in consumer prices that you can feel for yourself when you’re at stores.”
“South Korea’s inflation cooled a little in January and looks set to slow further, but it probably won’t drop back to around the Bank of Korea’s 2 percent target until the third quarter. We expect the BOK to pause and take stock of its quick 75 basis points of rate hikes since August, and resume tightening in the second half of 2022,” Bloomberg economist Justin Jimenez said.
While monetary easing from the BOK and other central banks helped support economies during the COVID-19 pandemic, such policies have also fueled asset bubbles and price gains that analysts warn could damp longer-term economic growth.
Minutes from the BOK’s meeting last month, released on Thursday, showed board members calling for more vigilance on inflation, with one calling for a “pre-emptive response.”
Yesterday’s report also showed that consumer prices excluding costs for oil and agricultural goods rose 3 percent, the highest reading in 10 years for so-called core inflation.
December transportation costs slipped 0.3 percent from a month earlier, but rose 7.2 percent year-on-year. Food and beverage prices increased 5.5 percent from a year earlier, while utility costs rose 3.3 percent.
The BOK is to make its next rate decision on Feb. 24, the last meeting before Lee steps down next month and voters go to the polls to pick a new president.
European Central Bank (ECB) President Christine Lagarde is expected to step down from her role before her eight-year term ends in October next year, the Financial Times reported. Lagarde wants to leave before the French presidential election in April next year, which would allow French President Emmanuel Macron and German Chancellor Friedrich Merz to find her replacement together, the report said, citing an unidentified person familiar with her thoughts on the matter. It is not clear yet when she might exit, the report said. “President Lagarde is totally focused on her mission and has not taken any decision regarding the end of
French President Emmanuel Macron told a global artificial intelligence (AI) summit in India yesterday he was determined to ensure safe oversight of the fast-evolving technology. The EU has led the way for global regulation with its Artificial Intelligence Act, which was adopted in 2024 and is coming into force in phases. “We are determined to continue to shape the rules of the game... with our allies such as India,” Macron said in New Delhi. “Europe is not blindly focused on regulation — Europe is a space for innovation and investment, but it is a safe space.” The AI Impact Summit is the fourth
CONFUSION: Taiwan, Japan and other big exporters are cautiously monitoring the situation, while analysts said more Trump responses ate likely after his loss in court US trading partners in Asia started weighing fresh uncertainties yesterday after President Donald Trump vowed to impose a new tariff on imports, hours after the Supreme Court struck down many of the sweeping levies he used to launch a global trade war. The court’s ruling invalidated a number of tariffs that the Trump administration had imposed on Asian export powerhouses from China and South Korea to Japan and Taiwan, the world’s largest chip maker and a key player in tech supply chains. Within hours, Trump said he would impose a new 10 percent duty on US imports from all countries starting on
STRATEGIC ALLIANCE: The initiative is aimed at protecting semiconductor supply chain resilience to reduce dependence on China-dominated manufacturing hubs India yesterday joined a US-led initiative to strengthen technology cooperation among strategic allies in a move that underscores the nations’ warming ties after a brief strain over New Delhi’s unabated purchase of discounted Russian oil. The decision aligns India closely with Washington’s efforts to build secure supply chains for semiconductors, advanced manufacturing and critical technologies at a time when geopolitical competition with China is intensifying. It also signals a reset in relations following friction over energy trade and tariffs. Nations that have joined the Pax Silica framework include Japan, South Korea, the UK and Israel. “Pax Silica will be a group of nations
RSS