S. Korea's central bank cautious on price pressures on supply and demand side

15:58, February 11, 2011      

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The Bank of Korea (BOK) expressed Friday its cautious stance on rising price pressures on both supply and demand sides.

Consumer prices of agricultural, fishery and livestock products and of international raw materials are likely to maintain a strong upward trend, while demand-side pressures are on the increase, the BOK said in a statement after leaving the key interest rate unchanged at 2.75 percent.

The BOK froze the seven-day repurchase rate at 2.75 percent this month after unexpectedly raising the rate by a quarter percentage point in January.

The country's consumer price index (CPI) rose 4.1 percent in January from a year earlier, breaching the upper end of the BOK's target range. Producer price inflation gained 6.2 percent in January from a year before, the fastest growth in more than two years.

The report also noted that the South Korean economy appears on track for solid growth, helped by the favorable development of exports and increasing consumption and facilities investment.

However, it pointed to the fiscal problems of European countries and the increase in oil prices associated with the Egyptian unrest as major downside risk factors.

Source: Xinhua

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