The Monetary Policy Committee of the Bank of Korea (hereinafter referred to as the Monetary Policy Committee) decided today (15th) to maintain the base rate of 0.5% per annum.
This is the ninth 'freeze' following last year's July, August, October and November and this year's January, February, April, and May.
Earlier, since the end of May, Bank of Korea Governor Lee Ju-yeol has mentioned the issue of 'financial imbalance', such as rising asset prices and rising household debt, on several occasions, implying the possibility of a rate hike within the year.
In particular, on the 24th of last month, he predicted a base rate hike within the year as a known fact, saying, "It is necessary to normalize monetary policy in an orderly manner at a time that is not too late within the year."
However, today's MPC is interpreted as judging that it is rather early to reduce the economy by raising interest rates right away in terms of 'orderly' normalization.
Moreover, economic uncertainty, which has increased due to the recent fourth wave of COVID-19, also seems to have influenced the decision to freeze the base rate.
Kim So-young, a professor of economics at Seoul National University, said before the Monetary Policy Committee, "The economic uncertainty has also grown significantly as the COVID-19 situation suddenly worsened this month."
In a recent survey of bond experts by the Financial Investment Association (KFTC), 89 out of 100 people predicted that the MPC would freeze the base rate at this meeting.
(Photo = Yonhap News)