The Bank of Korea raised the key interest rate four times in a row for the first time in history in consideration of soaring inflation and the won-dollar exchange rate.



The Bank of Korea Monetary Policy Committee (hereinafter referred to as the Monetary Policy Committee) raised the base interest rate by 0.25 percentage points from the current 2.25% per annum to 2.50% at the monetary policy direction meeting held from 9 am on the 25th.



Accordingly, the base interest rate has risen by 0.25 percentage points six times, 0.50 percentage points once, and 2.00 percentage points in all, from August and November of last year and January, April, May, and July of this year. I lost.



The Monetary Policy Committee maintained its policy of raising the key interest rate because it judged that the inflation rate has not yet stopped.



Lee Chang-yong, governor of the BOK, appeared at the National Assembly Planning and Finance Committee on the 1st of this month and said, "It's unfortunate that if the inflation rate exceeds 6%, much larger costs can be involved. We have no choice but to maintain the trend of raising interest rates," he said.



The consumer price index (108.74) in July jumped 6.3% from the same month last year due to the rise in prices of food and agricultural products.



This is the highest growth rate in 23 years and 8 months since November 1998 (6.8%).



The expected inflation rate, which corresponds to the expected inflation rate for the next year, was 4.3% this month, slightly lower than the record high of July (4.7%) in July, but it is still above the 4% level.



Not only inflation, but also the 'inversion' of the key interest rates in Korea and the US seems to have been an important factor in the hike.



After the US Federal Reserve (Fed) took a 'giant step' (a 0.75 percentage point increase in the base rate at a time) for two months in a row at the regular meeting of the Federal Open Market Committee (FOMC) on the 27th (local time) of last month, the US base rate (2.25-2.50%) was higher than Korea (2.25%).



As the MPC raised the base rate by 0.25 percentage points today, the upper end of the base rate of Korea (2.50%) and the United States (2.25-2.50%) became the same, but next month, the US Federal Reserve will take the smallest big step (a 0.5 percentage point increase in the base rate at once). As there is a high possibility of stepping on it, it is expected that it will soon turn over to the US dominance again.



(Photo = provided by the Bank of Korea, Yonhap News)