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Goldman Sachs Changes Korea Rate Forecast to ‘No Cut’ for 2012

Feb. 7 (Bloomberg) -- The Bank of Korea will leave borrowing costs unchanged this year, Goldman Sachs Group Inc. said, changing its earlier forecast for a 50-basis point cut.

“We no longer expect rate cuts in 2012, given the stronger-than-expected global growth momentum and signs of improvement in European financial conditions,” Kwon Goohoon, a Seoul-based economist at Goldman Sachs, wrote in a report released yesterday.

Any increase in the benchmark rate is also unlikely as South Korea’s export growth and price pressures have slowed, Kwon wrote. Policy makers may raise the rate “early” next year, according to the report.

Inflation cooled to a one-year low of 3.4 percent last month, while overseas shipments shrank 6.6 percent from a year earlier, the first decline in more than two years, official data showed this month.

The central bank will leave its seven-day repurchase rate at 3.25 percent when it reviews monetary policy on Feb. 9, according to 17 of 18 economists in a Bloomberg survey.

To contact the reporter on this story: Jiyeun Lee in Seoul at

To contact the editor responsible for this story: Sandy Hendry at

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