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- ■ It is difficult to conclude that Korea is in a state of deflation as there is little possibility that the recent downward trend will continue. This is because September’s price drops were largely spurred by temporary supply shocks, and core inflation has stalled at the mid-0% range. ■ Along with short-term fluctuations such as supply shocks and economic contractions, the mid- to long-term inflation rate continues to fall while that for the January-September period remained significantly below the target. ■ The current monetary policy management system, of which an explicit goal is financial stability, presents limitations in countering disinflation with a cut in the base rate. Thus, improvements are needed to place more emphasis on the initial task―stabilizing inflation. Related Report: KDI Economic Outlook 2019-2nd Half 'Recent Fluctuations in the GDP Deflator: Analysis and Implications' Related Report: KDI Economic Outlook 2019-2nd Half http://www.kdi.re.kr/kdi_eng/art/16344/3114/Evaluation_and_Implications_of_the_Recent_Disinflation http://www.kdi.re.kr/kdi_eng/publications/economic_outlook.jsp?pub_no=16344