Inflation Target Band To Widen

The Bank of Korea (BoK) announced on November 26 that it would use a wider consumer price inflation target band for the years 2010-2012 compared to that currently used. At present, the BoK operates monetary policy in order to keep inflation between 2.5-3.5%. Going forward a band of 2.0-4.0% will be in force. In our view, the new wider band is designed to give greater freedom to the BoK over the coming years in its management of monetary policy while the global recovery remains fragile. Consumer price inflation stood at 2.0% y-o-y in September.

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