SEOUL- South Korea’s consumer inflation came in weaker than expected in November and below the central bank’s target, as analysts see more rate cuts in the year ahead.
The consumer price index (CPI) rose 1.5 percent in November from a year earlier, after a rise of 1.3 percent in October, data from Statistics Korea showed on Tuesday, below the Bank of Korea’s 2 percent inflation target.
A 1.5 percent rise for November was also weaker than a median 1.7 percent increase tipped in a Reuters poll of economists.
The CPI declined 0.3 percent on a monthly basis from October, also weaker than a 0.1 percent fall tipped in the poll.
The BOK is seen taking a pass in January but cut interest rates by a quarter-point in February to support a weakening economy, according to economists in a Reuters snap poll.
To boost activity in Asia’s fourth-largest economy, which narrowly avoided a recession last quarter, the BOK cut rates for a second meeting in a row on Nov. 28 – the first back-to-back reductions since early 2009. Inflation has largely stayed under control.
However, BOK Governor Rhee Chang-yong said the future remains uncertain given President-elect Donald Trump’s plans to hike tariffs. The U.S. is one of South Korea’s largest export destinations. A strong majority of economists, 16 of 22 in a snap poll conducted Nov. 28-29, forecast the BOK would cut its base rate by 25 basis points to 2.75 percent in February.
