The Monetary Policy Committee of the Bank of Korea (hereinafter referred to as the Monetary Policy Committee) raised the base rate by 0.75 percentage points (p) three times this year alone, including today (26th), but the trend of increase is expected to continue until the end of the year.
At the Monetary Policy Direction Meeting held this morning, the Monetary Policy Committee raised the key interest rate from 1.50% per annum to 1.75% by 0.25 percentage points (p).
Market and economic and financial experts are of the view that the base rate should rise to at least 2.25% within this year in order to respond to strong inflationary pressures and a faster-than-expected rate hike in the US.
However, there are concerns that if the base interest rate rises too quickly, it will shock the already unstable economy due to the Ukraine crisis, and the interest burden of the vulnerable, such as the self-employed, may increase rapidly, causing the overall financial situation to become insolvent.
Experts believe that the base rate, which currently stands at 1.75%, is highly likely to rise two or three more times this year.
Park Seong-wook, head of the macroeconomic research department at the Financial Research Institute, said, “The market is expecting three or four additional hikes, including this one (May). , there is a possibility that it will rise three more times and reach 2.25%."
Cho Young-moo, a research fellow at the LG Economic Research Institute, also said, "Even if it is raised this month, it is likely that the base rate will be raised two or three more times by the end of the year. "I expected.
He said, "In the case of the US, the upper end of the base rate was initially expected to be around 3% by the end of the year, but considering the recent global financial market outlook, it is likely to rise to the mid-3% range. Therefore, the BOK will have no choice but to raise the upper end in response to this." added.
Kim Ji-man, a researcher at Samsung Securities, also said, "This year, the BOK will raise the base rate three times in this month, July, and October." %,” he said.
Park Seok-gil, head of JP Morgan's Financial Market Management Division, said, "The BOK will raise the base rate by 25 basis points at its meetings from May to July, August, and October, and the base rate will be 2.5% at the end of the year. As a result, the base rate could reach 2.75% by the first quarter of next year.”
However, most experts observe that it is unlikely that the BOK MPC will take a big step in raising 0.50 percentage points all at once.
However, there is also an expectation that the BOK will take out a Big Step card if inflation is not captured as easily as expected.
Joo Won, head of the economic research department at Hyundai Research Institute, said, "The consumer price inflation rate, which will be announced early next month, is likely to break through the 5% line.
He said, "Including one big step, if you raise it about four times by the end of the year, 3.