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A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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Dec 18 2012

Assessing Korean Inflation Risks

In November the Korean inflation rate fell to a three-month low, dipping below the Bank of Korea’s (BoK) inflation target of two to four percent. Some market observers, disappointed that the BoK decided not to lower its policy rate further to stimulate the Korean economy, continue to expect more policy easing. At the same time, inflation remains above its August low and the latest decline could just be a temporary pullback. Therefore, a nascent inflation cycle upturn cannot be ruled out.

To better gauge the risk of a cyclical upturn in Korean inflation, it is important to monitor ECRI’s Korean Future Inflation Gauge, which is a broad measure of underlying inflation pressures designed to anticipate cyclical swings in the Korean inflation rate.

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