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Bank of Korea keeps policy rate at 1.25%

The Bank ofKorea kept its base rate unchanged at 1.25% as it forecasts a sustained trend ofmodest growth in the domestic economy despite rising global risks.

The central bank said July 14 that it believes the SouthKorean economy will sustain its trend of modest growth due to expansionarymacroeconomic policies. It added that the global economy will beaffected by uncertainties related to the U.K.'s decision to leave the EU, aswell as financial and economic conditions in emerging markets.

Given economic conditions abroad and a decline in SouthKorean exports, the central bank believes the uncertainties surrounding thegrowth path is high.

Consumer price inflation stood at 0.8% in June, remainingsteady from May, while core inflation excluding agricultural and petroleumproduct prices rose slightly to 1.7% from 1.6% in May.

Looking ahead, the central bank forecasts that consumerprice inflation will remain at a low level for the time being and graduallyincrease as the effects of low oil prices diminish.