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Bank of Korea stands pat on rates, cuts growth forecast

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South Korea’s central bank stood pat on interest rates for a third straight policy decision and lowered its economic growth forecast for this year.

The Bank of Korea kept the benchmark seven-day repurchase rate unchanged at 3.50% on Thursday as widely expected, continuing a pause in its rate-increase campaign aimed at fighting inflation.

The bank’s policy is seen as gradually shifting to supporting growth, amid signs that inflation is easing and the economy is losing steam.

All 27 analysts surveyed by The Wall Street Journal ahead of the bank’s decision had forecast no rate move in May, with eight of them penciling in a rate cut by the end of this year to help boost growth.

The bank said Thursday that it now expects the country’s gross domestic product to expand 1.4% in 2023, slower than its February projection of 1.6% growth.

Inflation is expected to average 3.5% for 2023, unchanged from its earlier projection, the bank said.

South Korea’s economy is now cooling, with exports contracting year over year for a seventh consecutive month in April–the longest losing streak in more than three years–on weak global demand.

The country’s headline inflation eased to 3.7% in April, falling below 4% for the first time in 14 months, though it is still above the bank’s 2% target.

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