BOK lowers inflation target to 2% for 2016-18

BOK lowers inflation target to 2% for 2016-18


Also from the Bank of Korea, we have fresh
inflation targets for the next three years noticeably lower than the previous target
band. The new target comes after criticism that
former goals have simply not been attainable. Shin Se-min reports.
The Bank of Korea lowered its annual inflation target to two-percent, starting 2016,…
scrapping its current policy of using a target band for consumer prices.
The new inflation goal is down from the existing target range of two-and-a-half to three-and-a-half
percent, set to expire as of this year. The target is considered the optimal rate
of inflation for the economy,… described by the BOK as being the most desirable level
of price growth for stable economic expansion. Citing weaker inflationary pressure,…
the central bank attributed the trimmed target to the country′s aging population, heightened
price competition in exports, and weakening growth potential influenced by a prolonged
fall in crude oil costs. All things considered,… the BOK said it
expects consumer prices to pick up an average one-point-seven percent next year. ″Lowering the target to two-percent is
a sign Korea is following the lead taken by developed countries like Canada and the UK,…
and shows its determination to achieve stable economic growth down the line.″
Under the current target band set back in late 2012,… the central bank had missed
projections for consumer price growth every month for more than two-and-a-half years,…
sparking criticism,… and pushing it to put foward more attainable goals and assume
responsibility. Starting next year, if the actual inflation
rate deviates from the targeted two percent by more than point-five-percentage points
for six consecutive months,… the top central banker will be required to hold a news conference
to explain why. ″With the lower inflation goal, the central
bank also brought Korea′s potential growth rate down a notch, projecting it will stand
between three-to three-point-two percent leading up to 2018.
Shin Se-min, Arirang News.″

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