Monetary policy makes in South Korea decided today to keep interest rates steady at 2.00% fir the 13th straight meeting, hoping to support Asia's fourth largest economy to overcome the consequences of the financial crisis. As for China, it released reports showing inflation accelerated that may force the central bank to raise interest rates end the yuan's peg to the dollar two years ago.
The Bank of Korea kept rates unchanged meeting market forecasts, while the bank ensured it focus on supporting economic growth besides stimulating internal investments to guarantee solid recovery.
The Korean economy is showing mixed data, as growth slowed in the fourth quarter, while unemployment inclined in January, but exports increased for the fourth straight month and business confidence rose to the highest in seven years. All this encouraging the central bank to keep rates unchanged till the economy determines its direction.
However, deteriorations in the labor sector became main concerns for the Bank of Korea especially after unemployment rate rose to 4.8% the highest in 10 years in January. With unemployment rate increasing, growth is negatively affected as the economy grew 0.2% in the quarter ended December, while Governor Lee pledged to lower unemployment by 3% this year.
The Korean government increased this year's budget by 3% to 292.8 trillion won ($258 billion) to support economic recover. Korean exports continued to increase recording 31% in February the 4th straight incline, benefiting from the recovering global demand especially from China.
As for China, retail sales increased 22.1% in February, higher than the prior 17.5% and it topped analysts' estimates of 18.1%.
On the other hand, industrial production rose 12.8% less than the prior 18.5% and worse than market forecasts of 19.0%.
Consumer prices in China inclined 2.7% last month compared with a previous 1.5%, and it topped analysts' estimates of 2.5%. Producer prices gained 5.4% from 4.3%, while forecasts referred to 5.1%. The purchasing price index came in at 10.3% from 8.0%, and it came higher the market projections of 8.5%.
Accelerating inflation is forcing policy makers in China to withdraw stimulus in order to maintain growth. The Chinese Prime Minister kept his inflation forecast in 2010 at 3%, after banks kept pumping liquidity in markets, which helped growth to accelerate to 10.7% in the fourth quarter of last year.
The People's Bank of China didn’t raise borrowing costs since December 2007, and the one year lending rate remains at 5.31%, while the deposit rate was kept at 2.25%. China pegged the yuan at 6.83 per dollar since July 2008 to support exports, the main pillar for economic growth.
The Bank of Korea kept rates unchanged meeting market forecasts, while the bank ensured it focus on supporting economic growth besides stimulating internal investments to guarantee solid recovery.
The Korean economy is showing mixed data, as growth slowed in the fourth quarter, while unemployment inclined in January, but exports increased for the fourth straight month and business confidence rose to the highest in seven years. All this encouraging the central bank to keep rates unchanged till the economy determines its direction.
However, deteriorations in the labor sector became main concerns for the Bank of Korea especially after unemployment rate rose to 4.8% the highest in 10 years in January. With unemployment rate increasing, growth is negatively affected as the economy grew 0.2% in the quarter ended December, while Governor Lee pledged to lower unemployment by 3% this year.
The Korean government increased this year's budget by 3% to 292.8 trillion won ($258 billion) to support economic recover. Korean exports continued to increase recording 31% in February the 4th straight incline, benefiting from the recovering global demand especially from China.
As for China, retail sales increased 22.1% in February, higher than the prior 17.5% and it topped analysts' estimates of 18.1%.
On the other hand, industrial production rose 12.8% less than the prior 18.5% and worse than market forecasts of 19.0%.
Consumer prices in China inclined 2.7% last month compared with a previous 1.5%, and it topped analysts' estimates of 2.5%. Producer prices gained 5.4% from 4.3%, while forecasts referred to 5.1%. The purchasing price index came in at 10.3% from 8.0%, and it came higher the market projections of 8.5%.
Accelerating inflation is forcing policy makers in China to withdraw stimulus in order to maintain growth. The Chinese Prime Minister kept his inflation forecast in 2010 at 3%, after banks kept pumping liquidity in markets, which helped growth to accelerate to 10.7% in the fourth quarter of last year.
The People's Bank of China didn’t raise borrowing costs since December 2007, and the one year lending rate remains at 5.31%, while the deposit rate was kept at 2.25%. China pegged the yuan at 6.83 per dollar since July 2008 to support exports, the main pillar for economic growth.
