IMF Advises South Korea to Normalize its Monetary Policy

"While inflation is around the Bank of Korea's target of 2 per cent, a gradual monetary policy normalization seems appropriate given high uncertainty," the IMF said in a statement, concluding its annual visit to the country.

South Korea should continue to normalize monetary policy to provide support for shoring up economic activity even as headline inflation is easing, the International Monetary Fund said on Wednesday.

It downgraded South Korea's 2024 growth forecast to 2.2 per cent from 2.5 per cent partially due to "a weak recovery of domestic demand," and also cut the forecast for next year to 2.0 per cent from 2.2 per cent.

The Bank of Korea voted 6-1 to cut policy interest rates to 3.25 per cent in October as uncertainties regarding the future path ofoutput increased, while headline inflation in September undershot the bank's 2 per cent target. 

The IMF is a global organization that works to achieve sustainable growth and prosperity for all of its 191 member countries. It does so by supporting economic policies that promote financial stability and monetary cooperation, which are essential to increase productivity, job creation, and economic well-being. The IMF is governed by and accountable to its member countries.