Inflation expectations down in Nov. ahead of BOK's rate decision

Economy 06:00 November 22, 2022

SEOUL, Nov. 22 (Yonhap) -- South Korea's inflation expectations edged down on-month in November ahead of the Bank of Korea (BOK)'s widely-anticipated rate increase this week aimed at bringing price growth under control, a central bank survey showed Tuesday.

Ordinary people predicted that consumer prices will grow 4.2 percent over the next year, down 0.1 percentage point from 4.3 percent surveyed the previous month, according to the poll the BOK conducted early this month.

The figures are closely watched as their upward move could cause businesses to raise prices and people to ask for pay raises, thereby resulting in more upward pressure on inflation going forward.

The latest reading came ahead of the BOK's widely-expected rate hike at this year's last policy meeting set for Thursday.

A rate hike would represent the sixth straight increase and the ninth rise in the cost of borrowing since August last year as the country has been striving to tame inflation.

Consumer prices -- a key gauge of inflation -- jumped 5.7 percent in October from a year earlier, quickening from a 5.6 percent rise the previous month. It was far higher than the central bank's mid-term inflation target of 2 percent.

Last month, the BOK raised its policy rate by 0.5 percentage point, the second-ever big-step increase, to 3 percent.

Experts say that the central bank will likely slow the pace of its rate increase this week to a quarter percentage point, citing growing worries over an economic slump, jitters over a credit crunch and a recent rise in the won against the U.S. dollar that will help ease price pressure from imports.