Lots of Bluster, Unimpressive Results
Inflation continues in Korea, as expected. The Seoul Gyopo Guide suggested that the “war on inflation” declared by the Korean president was a pronouncement made far too late, and Korea faced a tenuous foreign exchange rate/interest rate/inflation conundrum. You cannot lag behind inflation, that isn’t how it works. Why? The reason is that in addition to the idea of actual inflation, there is the notion of expected inflation. In fact, one source of actual inflation in Korea, high energy prices (oil), has declined by over 10% over the past two months, as the Middle East tensions have been mitigated by the fear of a slowdown in global economic growth. However, expected inflation rages on, and as such, companies and people continue to fear inflation, which makes it a self-fulfilling prophecy of sorts.