For the second month in a row, interest rates were raised again... "Inflation at 5%" warning

<Anchor>

The Bank of Korea raised the key interest rate by 0.25 percentage points once again following last month.

It is the first time in 15 years that it has been uploaded for two months in a row, but it seems that there was a drop in precipitation as prices soared so quickly.

Let's look at the report of reporter Kim Jung-woo first, and let's talk.

<Reporter>

The Monetary Policy Committee of the Bank of Korea raised the base interest 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 reason for the additional increase in one month without the effect of the increase in last month being fully realized is because the price situation is not so bad.

Expectations that prices will gradually pick up after the peak of summer disappear, and the Bank of Korea warned that inflation, exceeding 4.5%, could continue into 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.

Maybe 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 whether to buy this one or not, but I put it on and listened to it and then this.

Inflation has risen so much that it costs tens of thousands of won even if you look at it like this.] 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.

(Video editing: Lee Seung-yeol, VJ: Jeong Young-sam)

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<Anchor>

Reporter Kim Jung-woo of the Ministry of Economy is here.

[Reporter Kim Jung-woo: Recently, government research institutes predicted the inflation rate of next year to be around 2%.

It will be better than it is now.

Of course, he intends to reassure the public, but today, Bank of Korea Governor Lee Chang-yong talked about a 4% inflation rate next year.

How scary is this? The inflation rate is a number that compares how much the price has risen compared to a year ago. Now, the inflation rate is in the 4-5% range, and 4% is higher here, so the shock will be doubled or tripled. it is inevitable.

So, I will manage the interest rate as soon as possible and raise the interest rate, which is a story like this.]

[Reporter Kim Jung-woo: Yes.

This is because the Bank of Korea's first goal is to revive the economy, even if it is possible to raise interest rates because the Bank of Korea's first goal is price stability.

That is why it is important to create a good atmosphere, especially since the government has just been inaugurated and social distancing has been lifted. .]

[Reporter Kim Jung-woo: Yes.

So, the governor of the Bank of Korea also said that he would raise interest rates while watching the economic growth rate.

But what is the problem? To revive the economy while stabilizing prices, and where to set interest rates to do so, it is not an easy question to find the right answer.

This is because it could fall into stagflation, the worst situation in which the Gyeonggi Province stagnates and inflation rises.

So the Bank of Korea and the government, which have slightly different goals, continue to meet and discuss, so we will have to wait and see.]