Excerpt from the statement by the Bank of Korea:
The Committee forecasts that the global economy will sustain its modest recovery going forward, centering around advanced economies, but judges that the possibility exists of its being affected by the changes in global financial market conditions stemming from the shift in the US Federal Reserve’s monetary policy stance and by the weakening of economic growth in some emerging market countries.
In Korea, despite exports having sustained their buoyancy the Committee appraises the economic recovery to have shown signs of slowing, as domestic demand has slackened somewhat due largely to the impact of the Seoul ferry accident. On the employment front, the number of persons employed has shown an uptrend similar to its level of recent years, led by increases in the 50-and-above age group and in the service sector. The Committee expects that the domestic economy will maintain a negative output gap for the time being going forward, although it forecasts that the gap will gradually narrow.
The Committee forecasts that inflation will gradually rise, although it will remain low for the time being. Regarding the housing market, the uptrends of sales and leasehold deposit prices in both Seoul and its surrounding areas and in the rest of the country slowed.
Looking ahead, while paying close attention to external risk factors such as shifts in major countries’ monetary policies, and closely monitoring the movements in domestic demand following the Sewol ferry accident, the Committee will conduct monetary policy so as to keep consumer price inflation within the inflation target range over a medium-term horizon while supporting the continued recovery of economic growth.