Economics
South Korea Cuts CPI Target, Pledges to End Low-Inflation Era
- Central bank sees potential growth rate at just more than 3%
- Low oil prices causing many countries to miss inflation target
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South Korea pledged to end a period of very low inflation that threatens to hurt the country’s economic growth and has now prompted the central bank to cut its target for consumer prices.
The annual pace of inflation has averaged less than 1 percent this year,
compared with the average of 2.7 percent for the prior decade. The Bank of Korea Wednesday lowered its target to 2 percent, from the previous range of 2.5 percent to 3.5 percent.
The Finance Ministry separately cut its growth estimates for 2015 and 2016, and said it will now start monitoring nominal gross domestic product. That measure isn’t adjusted for price changes and offers a better gauge for things like tax receipts and corporate revenue.