Tue Dec 03 13:30:00 UTC 2024: ## South Korea’s Inflation Rises Despite Central Bank Rate Cut
**Seoul, South Korea** – South Korea’s inflation rate edged up to 1.5% year-on-year in November, marking a rise from October’s 45-month low of 1.3%, but still below economists’ expectations of 1.7%. This increase comes despite the Bank of Korea (BOK) unexpectedly cutting interest rates by 25 basis points to 3% last week – its second consecutive cut since 2009.
The BOK attributed the rate cut to mitigating economic downside risks, following a near-recession in the third quarter where GDP grew by a mere 0.1% quarter-on-quarter. Despite the inflation rise, the BOK maintains that prices have stabilized and are expected to remain so due to lower global oil prices and weak demand. The bank revised its inflation outlook for 2024 and 2025 downward to 2.3% and 1.9%, respectively.
The BOK cited exchange rate fluctuations, global oil prices, domestic and international economic growth, and public utility fee adjustments as factors influencing future inflation. The Korean won has weakened against the US dollar recently, reaching a two-year high against the greenback, partly fueled by concerns over potential US trade tariffs. The US is South Korea’s second-largest trading partner.
First Piper 