Business News Asia
The Bank of Korea (BOK) voted on Oct. 12 for another large interest rate hike to curb inflation, despite concerns that it would slow economic growth too much.
The Bank of Korea’s Monetary Policy Committee raised its key interest rate by 0.50% to 3.00%, reaching the 3.00% range for the first time in about 10 years.
This latest rate hike is the eighth since last August. The total is up 2.50% after the BOK set rates at a record low to support the economy hit by the COVID-19 outbreak.
In addition, today’s rate hike was the second rate hike of 0.50% after the first hike in history in July.
Analysts had previously expected the BOK to raise interest rates by 0.50% at today’s meeting. This is because the Bank of Korea is prioritizing inflation. Inflation picked up sharply under pressure from energy and expensive raw materials, most of which South Korea had to import.
On Friday, October 7, the BOK governor said that inflation is likely to peak in October, but will remain high for a while, hovering above 5% at least until the end of the first quarter of next year.
Widening interest rate differentials between South Korea and the U.S. continued to drive the BOK’s big rate hike this week.