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South Korea Inflation Lowers, Boosts Rate Cut Anticipations

South Korea’s headline inflation lowered to its weakest rate from July 2016 in March on turn downs in food costs and weaker service prices growth, adding strain for lawmakers to move to an easing stance and accelerate stimulus. The customer price index increased by 0.4% in March from a past year, Statistics Korea stated undershooting 0.9% price increase tipped in Reuters’ survey. The statistics add to impending signs that China-US trade tensions and declining global demand are impacting sentiment in Asia’s fourth-biggest economy, and backs money market stakes that the BOK (Bank of Korea) might trim interest rates for the first instance in 3 Years.

If the weakness in consumer cost growth persists, the BOK might be forced to trim its inflation estimates again at its next rate review is on April 18, from present 1.4% for 2019. Since a month earlier, prices crashed by 0.2%, also missing the 0.35% increase inclined in the survey. The inflation statistics comes following a recent batch of weak pointers, such as figures that demonstrated exports contracted for 4 Months in March, whilst, February factory productivity reduced to a 2-Year low. The Core CPI—which excludes oil- and agriculture-based products—increased by 0.8% from a year ago, declining from 1.1% in February. The BOK’s present annual inflation aim is at 2%.

Recently, the BOK was in news as its chief stated that there is no rush to ease rule. South Korea’s central bank chief said that the bank is not in a hasten to apply any easing at the instant, contrary to anticipations in the bond market that the BOK is poised to curb interest rates shortly for the first time in 3 Years. During a press conference, Governor Lee Ju-yeol stated to reporters, “We require monitoring further but it appears the situation does not warrant reviewing an easing in policy interest rates at present.”