Bloomberg News

Bank of Korea’s Kim Weighing External Uncertainties, Inflation

October 22, 2011

Oct. 23 (Bloomberg) -- South Korea’s central bank will “normalize” interest rates as much as external uncertainties allow, Bank of Korea Governor Kim Choong Soo said.

“We need to keep moving” to curb inflation that is exceeding the central bank’s target limit of 4 percent, Kim told reporters in Incheon, west of Seoul. “Given the impact on the entire economy, we cannot raise interest rates as much and as fast as cutting them during a crisis.”

The Bank of Korea kept its benchmark seven-day repurchase rate at 3.25 percent on Oct. 13 for a fourth straight month as Europe’s debt crisis and a faltering U.S. recovery cloud the outlook the country’s exports. Rising risks to growth prompted Indonesia to unexpectedly cut interest rates this month, followed by Brazil. The Philippines unveiled fiscal stimulus.

Kim, who was speaking on Oct. 21 in comments that were released today, also said that the nation’s economic growth this year may fall slightly short of an estimate of 4.3 percent projected in July due to weakness in the U.S. and European economies. Quarterly GDP growth slowed to 0.6 percent in the third quarter from 0.9 percent in the second, according to a survey by Bloomberg News. GDP data will be released on Oct. 27.

--Editor: Brett Miller

To contact the reporter on this story: Eunkyung Seo in Seoul at eseo3@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net


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