Bank of Korea’s Base Rate Increased by 50 Basis Points
October 13, 2022
the Bank of Korea raised its base rate by 50 basis points to 3.0%. The size of that hike is double those of the prior seven increases of 25 basis points that began in August 2021. The vote behind today’s action was 5-2, with two dissents favoring another 25 basis point increase. Officials are sensitive to South Korea’s 5.6% CPI inflation, which is total terms and on an underlying basis has accelerated three percentage points over the past year and appears likely to stay above 5% for several more months. They are also worried that won weakness could exacerbate the difficulty of restoring in-target inflation but acknowledge a slowdown in economic growth.
The Board will determine the size of the next rate hike and the path of further increases after closely monitoring external conditions, such as results of the November FOMC meeting and movements in international commodity prices, and evaluating how these conditions may affect domestic inflation and growth as well as financial and foreign exchange markets.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Korea
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