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Korea’s weak growth to bring rate cuts soon

Today’s Q4 GDP data from Korea show that the economy ended 2011 on a very weak note. Growth is likely to be sluggish at best over the next few quarters amid soft global demand, while Korea’s inflation should fall back into its target range this quarter. We maintain our long-held, non-consensus view that Korea’s policy rate will be cut by mid-2012. The sooner the central bank loosens policy, the better.

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