South Korea should normalize monetary policy, IMF says

SEOUL : South Korea should continue to normalize monetary policy to provide support for shoring up economic activity even as headline inflation is easing, the International Monetary Fund said on Wednesday.
“While inflation is around the Bank of Korea’s target of 2 per cent, a gradual monetary policy normalization seems appropriate given high uncertainty,” the IMF said in a statement, concluding its annual visit to the country.
It downgraded South Korea’s 2024 growth forecast to 2.2 per cent from 2.5 per cent partially due to “a weak recovery of domestic demand,” and also cut the forecast for next year to 2.0 per cent from 2.2 per cent.
The Bank of Korea voted 6-1 to cut policy interest rates to 3.25 per cent in October as uncertainties regarding the future path ofoutput increased, while headline inflation in September undershot the bank’s 2 per cent target.