Bank of Korea's Monetary Policy Committee Statement
Based on currently available information, the Committee considers the moderate economic recovery in the US to havecontinued, but the sluggishness of economic activities in the euro area to have persisted. Economic indicators in emerging market countries have shown signs of gradual improvement.The Committee expects the global economy to exhibit a modest recovery going forward but judges the downside risks to growth to be large,owing chiefly to the euro area fiscal crisis and to the fiscal consolidation issuein the US.
In Korea, the Committee appraises economic growth to have remained at a weaklevel, with exports improving but the sluggishness in domestic demand continuing.On the employment front, the number of persons employed has shown a trend of increase above its average pre-global financial crisis level, ledby the higher age groups. Going forward, the Committee anticipates that the negative output gap in the domestic economy will persist for a considerable time, due mostly to the prolongation of theeuro area fiscal crisis and to the delay in recoveryof worldeconomic growth.
Consumer price inflation fell to 1.6 percent in November, from 2.1 percent the previous month, a result mainly of declines in agricultural and petroleum product prices, and core inflation excluding the prices of agricultural and petroleum products continued to run at a low level at 1.3 percent.The Committee forecasts that inflation will remain low for the time being, owing primarily to the easing of demand-side pressures. As for housing prices, those in Seoul and its surrounding areas continued their downtrendand those in the rest of the country their uptrend.
Looking ahead, the Committee will closely monitor external risk factors and the consequent changes in financial and economic conditions at home andabroad, and conduct monetary policy so as to stabilize consumer price inflationat the inflation target over a medium-term horizon while continuing its efforts to lower inflation expectations and ensuring that the growth potential isnot eroded.