The Monetary Policy Committee of the Bank of Korea raised the base rate by 0.25 percentage points from 1.5% to 1.75%.
Since August of last year, the key interest rate has completely returned to the pre-COVID-19 level, raising a total of 1.25 percentage points five times, each 0.25 percentage points.
In particular, the fact that the effect of the increase last month has not yet been fully realized and the additional increase in one month is due to the unfavorable price situation.
Expectations that prices will gradually pick up with the peak of summer disappear, and the Bank of Korea warned that high inflation, exceeding 4 or 5%, could continue until next year.
[Lee Chang-yong / Governor of the Bank of Korea: In the next few months, the possibility of exceeding 5% is expected to increase as has already been confirmed.
Next year, the inflation rate will take 4% for a long time and then go down.]
However, there are also concerns that the economy will subside if interest rates are raised too quickly and strongly to catch inflation.
According to a survey by the National Statistical Office, in the first quarter of this year, Korean households reduced consumption in almost all fields, including food and dining out.
[Bae Young-sook / Gangseo-gu, Seoul: I was thinking about buying this too, but I put it on and listened to it and then this.
Inflation is so high that even if you look at it like this, you get tens of thousands of won.]
Lee Chang-yong, governor of the Bank of Korea, said that he should be concerned about inflation, but he will adjust the rate and extent of interest rate hikes while looking at other indicators such as economic growth rate.
(Reporter: Kim Jung-Woo, Editing: Lee Seung-Yeol, VJ: Jung Young-Sam, Producer: D Content Planning Department)