South Korean central bank said Monday that it will conduct monetary policy flexibly this year.
"The central bank will conduct flexible monetary policy with a focus on stabilizing consumer prices. At the same time, the bank plans to take into consideration the overall economic and financial conditions," said a report by the Bank of Korea (BOK).
"The BOK will check and analyze global economic uncertainties," it added.
According to the Bank of Korea (BOK), South Korea's consumer prices are expected to accelerate this year on firmer oil prices while the annual inflation is expected to rise 3.3 percent in 2008,up from 2.5 percent last year.
The central bank said there is a 34 percent possibility of inflation exceeding the BOK's target range of 2.5 to 3.5 percent.
The report comes as the BOK and the Finance Ministry have sent conflicting messages about inflation and economic growth. The governor of BOK said last week that a widening current account shortfall and rising inflation reflect signs that the BOK needs to raise a key rate, while the Finance Ministry favors a rate cut and a weaker won to help boost slowing economic growth.
The BOK predicted that South Korean economy to grow by 4.7 percent this year, compared with an estimated 5 percent expansion the previous year. However, the government aims at raising the rate to around 6 percent in 2008 by easing regulations and cutting taxes.
Source: Xinhua
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