Posted on 26 Dec 2013
South Korea's central bank said on Thursday that weakened demand is not to blame for the country's current low inflation, and it expects price pressures to rise next year as the domestic economy improves.
The Bank of Korea said in its guidelines for 2014 monetary policy that eased price pressures at present are only due to temporary supply factors as well as changed policies, and inflation would increase in 2014.
It added that the central bank would seek countermeasures to curb bond yield from rapidly steepening due to external factors, and pledged to boost monitoring of policy changes inside and outside the country that could affect markets.
In light of rapid fluctuations in global markets, the central bank said it would seek steps to lessen market volatility as well as enhance the Korean won's ability to absorb shocks.
The Bank of Korea said the global economy is expected to improve next year, although the U.S. Federal Reserve's decision to start reducing its stimulus, along with Washington's fiscal uncertainties, pose downside risks.
