The Bank of Korea set its mid-term inflation target at two percent at a monetary policy meeting on Wednesday.
 
The 2016-2018 target is about one percentage point lower than the middle value of the bank's target of between two-point-five to three-point-five percent from 2013 to this year.
 
It is the first time that the central bank has proposed a single number, rather than a range, for the inflation target.
 
The bank said the appropriate inflation rate in the next three years is around two percent as demand has weakened due to low growth and aging. It also cited a drop in inflationary pressure stemming from price competition.
 
The bank added that it lowered the inflation target and proposed a single numerical value as it expects prices to increase relatively gradually for the time being.
 
The BOK forecast that consumer prices will increase one-point-six percent in the first half of next year and one-point-seven percent in the whole of next year. It said the rate will lag behind the inflation target due to the recent drop in international oil prices.
 
For 41 consecutive months between June 2012 and last month, increases in consumer prices failed to reach the central bank's inflation target due to the economic recession.