Therefore, if firms’ and households’ medium- to long-term inflation expectations are anchored at the target level, which central banks aim to achieve, and the general public perceives that prices will revert to 2 percent sooner or later even if they fall temporarily, monetary policy responses are judged unnecessary since trend inflation is unchanged.
In the latter half of this year the Korean economy is expected to sustain its trend of improvement, thanks to the economic recoveries in major advanced economies including the US and to the effects of our expansionary macroeconomic policies.