SEOUL (Reuters) -South Korea’s consumer prices rose in October at the fastest pace in more than a year, government data showed on Tuesday, bolstering the case for policymakers to refrain from cutting interest rates further.
The consumer price index rose 2.4% in October from a year earlier, the fastest pace since July last year, and accelerating after rising 2.1% in September. A Reuters poll showed analysts expected headline inflation at 2.1% in October.
The Bank of Korea held interest rates steady for a third straight month in October amid an upswing in property prices and volatile dollar-won market. Still, Governor Rhee Chang-yong said a majority of the bank’s seven-member board remained open to a rate cut within three months.
“In our base case, we continue to believe the BOK’s rate-cutting cycle has already ended for now at 2.50%,” said Kim Jin-wook, an economist at Citigroup Inc, even as he expects prices of agricultural products and services to face deflationary pressures after the holiday season.
The median expectation is now for one more cut in November and then a prolonged pause.
The index rose 0.3% on a monthly basis, also faster than the no change expected by economists.
(Reporting by Cynthia Kim; Editing by Nia Williams and Sam Holmes)
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