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Full text of BOK's statement on monetary policy decision for April.

All News 11:32 April 13, 2017

SEOUL, April 13 (Yonhap) -- Following is the full text of the Bank of Korea's statement on its monetary policy decision for April. The central bank's monetary policy board decided Thursday to hold the base rate steady at 1.25 percent for the month.

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The Monetary Policy Board of the Bank of Korea decided today to leave the Base Rate unchanged at 1.25 percent for the intermeeting period.

Based on currently available information the Board considers that the global economic recovery has continued to expand. The global financial markets have shown generally stable movements, with the trend of rising stock prices continuing for example. Looking ahead the Board sees the global economic recovery as likely to be affected by factors such as the directions of the new US government's economic policies, the pace of monetary policy normalization by the US Federal Reserve, the movements toward spreading trade protectionism, and the political uncertainties in the euro area.

The Board judges that the trend of domestic economic growth has expanded somewhat, as exports and investment have improved although consumption has remained low. The sluggishness in employment conditions has eased, with the extent of decline in the number of persons employed in the manufacturing sector having lessened and the trend of increase in persons employed in the service sector expanded. The Board sees the domestic economy as likely to continue its trend of moderate growth going forward, and forecasts a rate of GDP growth for this year slightly above the January projection (2.5%). Exports will sustain their trend of improvement, thanks chiefly to the global economic recovery, and domestic demand activities will also recover moderately as the deterioration in economic agents’ sentiment eases. However, the paces of improvement in exports and domestic demand activities are expected to be limited, owing to changes in conditions related to trade with major countries and to the weak improvement in households’ real purchasing power.

Consumer price inflation has continued at the 2% target level, in line mainly with increases in the prices of petroleum and agricultural, livestock and fisheries products. Core inflation (with food and energy product prices excluded from the CPI) has remained in the mid- to upper-1 percent range, while the rate of inflation expected by the general public has fallen to the mid-2 percent level. Looking ahead the Board expects that consumer price inflation will for the time being fluctuate at the 2% level, and for the year as a whole slightly exceed the January projection (1.8%). Core inflation will maintain a level in the mid- to upper-1 percent range.

In the domestic financial markets, the volatilities of both stock prices and long-term market interest rates have shown low levels, in reflection for example of stable movements in the global financial markets. After having fallen the Korean won-US dollar exchange rate has rebounded, due mainly to a shift to US dollar strengthening and to geopolitical risks. The extent of growth in bank household lending has continued to lessen, but the substantial increase in household lending by non-banks has been sustained. Housing sales prices in Seoul and its surrounding areas have risen slightly, and those in the rest of the country have held steady.

Looking ahead, the Board will conduct monetary policy so as to ensure that the recovery of economic growth continues and consumer price inflation can be stabilized at the target level over a medium-term horizon, while paying attention to financial stability. As the inflationary pressures on the demand side are not expected to be high given the moderate pace of domestic economic growth, the Board will maintain its stance of monetary policy accommodation. In this process it will closely monitor conditions related to trade with major countries, geopolitical risks, the progress of monetary policy normalization by the U.S. Federal Reserve, and the trend of increase in household debt.
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