The Korea of the South Central Bank increased its Inflation forecasts

April 12, 2011, 9: 25 am EDT by Seonjin Cha and Eunkyung Seo

(Updates with comment from the the Economist fourth paragraph).

April 13 (Bloomberg) - inflation in the South Korea is probably accelerate forecasts more previously while economic growth remains consistent with expectations, the Bank of Korea said.Consumer prices may rise 3.9% in 2011, faster than the previous estimate of 3.5%, the Central Bank of the forecast in a statement in Seoul today. Gross domestic product expected to expand by 4.5 per cent this year and 4.8 per cent in 2012, after only a 6.2% gain in 2010, he said. The Bank predicted growth of 4.7% for next year December.Acceleration of inflation driven by economic growth and rising oil and food prices may prompt the Central Bank might increase interest rates three times this year, according to Barclays Plc Bank of Korea Governor Kim Choong Soo said yesterday take monetary policy action "neither too slow nor too fast" after that maintain the unchanged reference rate.Increased inflation forecasts "is a warmongering signal that strengthens our call for the rate increases, more this year," said Dariusz Kowalczyk, an economist based in Hong Kong to Credit Agricole CIB. He said that he predicted at least two increases of interest rates over this year and a strengthening in the WINS at 1,050 to the dollar at the end of the year.Won reached 0.1% to 1,092.85 per dollar as of 9: 18 pm in Seoul, according to data compiled by Bloomberg, while the stock index ABN won 0.1%.Central Bank of oil pricesThe also found the economy increased by 1.5% in the first quarter and expanded by 4.1% a year earlier. Economic growth was boosted by exports. Shipments overseas jumped 30.3% at record rate 48.6 billion in March, according to a report by the Government on April 1. consumer inflation in the fourth largest economy in Asia will accelerate 4.5 percent this year, the Monetary Fund International scheduled this week. It provides that economic growth should slow to 4.2% year next 4.5 percent this year.The threat of further increases in oil prices has become a "key downside risk" for global growth, according to the IMF. Oil will increase by 36% in 2011 to $107.16 per barrel, based on the average prices of Brent r. UK, Dubai and West Texas Intermediate crude, the IMF said. January forecast was for oil at US $89.50 per barrel this year.Inflation CeilingThe Bank Korea itself the projects of the price of oil to be $ 105 per barrel this year, from its previous estimate of $87. For may delivery fell $3.67 to $106.25 a barrel on the New York Mercantile Exchange yesterday, the lowest settlement since 30 March higher oil and food prices pushed consumption above 4 per cent increase the Central Bank ceiling each month since the beginning of the year crude oil, which prompted the Bank to increase rates by a quarter of a percentage point each in January and March. Consumer prices rose by 4.7% from a year earlier in March, the largest increase since October 2008.Governor Kim said high inflation will likely persist in the coming months and that basic excluding oil prices and food can acquire more rapidly than the consumer price at the end of this year. "We are determined to normalize interest rates," Kim said yesterday after maintaining the rate of the target to 3%. " "We will be move forward nor too slowly, or too fast and in a way forward - looking as we are overcoming a crisis.". The Central Bank began to increase the redemption rate of seven days in reference to a record minimum 2% the last July.Jobless RateThe Korean Central Bank to raise its rate target by 25 basis points in mayJuly and September, Wai Ho Leong, a regional economist based in Singapore in Barclays Plc, said yesterday in a report.The Bank has now also provides that the unemployment rate will decrease to 3.4% the year next 3.6% this year. Excess of accounts of the nation should be reduced to 11 billion in 2011 from $ 28.2 billion year last due to the high prices of oil.Unemployment rate of the Korea in the South remained at a maximum of one year in March as an economic recovery encouraged people to find work.The unemployment rate was at 4 percent, unchanged since February, statistics Korea in Gwacheon said today, citing seasonally adjusted figures.

-Editors: Ken McCallum, Brendan Murray

To contact the reporter on this story: Eunkyung Seo in Seoul to eseo3@bloomberg.net Seonjin Cha in Seoul at the scha2@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst in ppanckhurst@bloomberg.net Chitra Somayaji in the csomayaji@bloomberg.net

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