**Korean Central Bank Revises Growth Forecast to 2.0% and Introduces New Dot Plot System**
The Bank of Korea has raised its growth forecast for this year to 2.0%, with the inflation rate slightly increased to 2.2%. The central bank has decided to keep its benchmark interest rate unchanged at 2.50% and for the first time, released a six-month projection in a dot plot format, highlighting the focus on “pace adjustment” rather than direction.
**Growth Forecast Adjustment Reflects Semiconductor and Consumption Recovery**
On February 26, the Bank of Korea revised its economic outlook, raising the growth projection for this year to 2.0%, up 0.2 percentage points from its previous forecast of 1.8% in November. This adjustment reflects positive trends in the semiconductor market and a recovery in consumer spending. For next year, the growth forecast has been slightly lowered to 1.8%, taking into account base effects and external uncertainties.
The inflation forecast for this year has been adjusted to 2.2%, with core inflation at 2.1%, both up 0.1 percentage points from previous estimates. Although inflation is expected to be manageable near target levels, exchange rates, international oil prices, and rising cost pressures remain as risks.
**Benchmark Interest Rate Held at 2.50% for Six Consecutive Times**
The Monetary Policy Board decided to keep the benchmark interest rate at 2.50%, maintaining it for the sixth consecutive time. With the improved growth outlook, the necessity for further monetary easing has decreased. However, volatility in exchange rates, real estate prices in the metropolitan area, and household debt burdens pose challenges, making it difficult to ignore financial stability risks.
Governor Lee Chang-yong noted that, with inflation stable near the target level and growth performing better than expected, it is appropriate to maintain the current interest rate while monitoring domestic and international conditions.
**First Public Release of 6-Month Dot Plot, Favoring Rate Maintenance**
In a shift in communication style, the Bank of Korea has released its six-month interest rate outlook in a dot plot format for the first time. Each of the seven members of the Monetary Policy Board, including Governor Lee, presented three dots, totaling 21 dots to show the distribution. This visual representation marks a departure from the previous three-month verbal explanations, highlighting individual perceptions of probabilities.
Of the 21 dots, 16 indicated a preference for maintaining the current rate level, suggesting a leaning towards stability rather than a resumption of rate cuts, providing numerical confirmation of the policy center’s position.
**Message to the Market: Maintaining Balance**
The won-dollar exchange rate fluctuates around the 1,400 mark, amidst uncertainties caused by US trade policies, geopolitical risks, and global capital flows. Although the rise in the housing market has slowed, it is too early to determine a definitive direction.
Monetary policy is entering a phase of recalibrating balance between growth support and financial stability, and the Bank of Korea has indicated a preference for not rushing, sending a clear message to the market.